Why Didn’t You Let Me Know?

A recent case in the Fair Work Commission (FWC) has reinforced the importance of employers understanding and complying with the consultation provisions in their industrial instruments when undertaking major workplace change.

It also makes clear, that failure to do so, can result in a termination that arises from that workplace change being found to not be a genuine redundancy under the Fair Work Act 2009 (Cth) (Act) because the employer has failed to comply with the applicable consultation requirements.

The case in question relates to a Financial Data Analyst working for a not for profit organisation. The employee was hired in August, 2022.

In May, 2023 the organisation commenced conversations with the employee regarding a possible change in job title and provided a draft job description. A month later, the employee was told everything was on hold because of the appointment of a new Chief Information Officer (CIO) and that any changes needed to align with the CIO’s plan for the Business Intelligence Department.

Between July 2023 and October 2023, the CIO reviewed the structure and performance of the Business Intelligence Department. On 17 October 2023, the CIO sent an email to the Head of Data Analysis & Reporting and other Executives confirming that amongst other structural changes the position of Financial Data Analyst was “too narrow in scope and skill set, and so would be made redundant in the new structure.”

Six days later on 23 October, 2023 the CIO and Head of Data Analysis and Reporting met with the employee to inform him of the company’s decision to make his role redundant. This was followed by meetings on 1 November and 8 November 2023, where the employee unsuccessfully applied for an alternative position of Senior Data Analyst, resulting in his termination on 8 November, 2023. The employee subsequently lodged an unfair dismissal claim.

Upon reviewing the entire sequence of events between May and October 2023, the FWC found that the company had decided to review and restructure the Team as early as June 2023 but had not communicated this decision to the employee until 23 October 2023.

Whilst the FWC found that there were operational requirements that led to the company making the role of Finance Data Analyst redundant, it also found that the termination was not a genuine redundancy because the employer had failed to comply with the applicable consultation requirements under its own Enterprise Agreement. One of the requirements of the Act is for the employer to comply with any obligation in a modern award or enterprise agreement that applied to the employee’s employment requiring prior consultation about redundancy.

The FWC determined that the company should have consulted with the affected employee as reasonably practicable after the decision was made to initiate a structural review which could have resulted in a significant impact for the employee.

The FWC found that the CIO had consulted with “other leaders” on how to plan and effect the restructure, and that he had met with many others in the senior management team to understand what skills and experience were required in the Business Intelligence Department moving forward. The FWC said that the CIO had consulted with almost everyone except for the impacted employee.

In its decision, the FWC stated that the purpose of consultation requirements is to allow affected employees the opportunity to participate in the process and have a say in decisions and actions that may significantly impact them once a decision has been made to take action or introduce major changes. This is required before an employee is terminated. Consultation was not simply informing an employee that they were to be made redundant several months after the decision to restructure their team had already been made.

Having found that the dismissal was not a genuine redundancy, the FWC awarded the employee a gross payment of $7,452. This equated to three weeks’ pay, which is the amount of additional time it would have taken for the company to properly comply with the consultation requirements under their Enterprise Agreement.

If you would like more information on how to comply with consultation provisions in your industrial instrument, please contact us to see how we can support you and your organisation!