Failure to Adequately Consult Means No Genuine Redundancy

Some employers have had to legitimately make positions redundant due to a downturn in business only to find that, when challenged, the Fair Work Commission (‘FWC’) has decided the dismissal was not a genuine redundancy due to a failure to adequately consult prior to notification of dismissal.

If the termination does constitute a genuine redundancy, it means the employee cannot proceed with a claim that their dismissal was unfair.

In order for a redundancy to be a ‘genuine redundancy’ under the Fair Work Act 2009 (Cth), in the case of modern award and agreement covered employees it is a requirement that the employer complies with the prescribed consultation requirements. It is not sufficient for the job to no longer be required due to the operational requirements of the business and for redeployment opportunities to be considered.

In the case of the Hospitality Industry (General) Award 2010 (‘HIGA’), the consultation requirements are prescribed in clause 8 ‘Consultation about major workplace change’. Many other modern awards have identical provisions.

Clause 8 of the HIGA requires that once the employer has made a definite decision to make major changes that are likely to have significant effects such as termination of employment, the employer must:

• Give notice of the changes to all employees who may be affected by the changes and any representatives of the employees; and
• Discuss with affected employees and any representatives of the employees the introduction of the changes, the likely effect on the employees and measures to avoid or reduce the adverse effects of the changes on the employees.

These discussions must commence as soon as possible after the employer has made a definite decision about these major changes. The employer must also promptly consider any matters raised by the employees or any representatives of the employees about the changes during the course of the discussion.

For the purposes of the consultation, the employer must also provide in writing to the affected employees and any representatives of the employees all relevant information about the changes including the nature of the changes, the expected effects of the changes on the employees and any other matters that are likely to affect the employees. This does not extend to disclosing confidential information that would be contrary to the employer’s interests.

There are many decisions where the FWC has found a dismissal to be unfair for failure to adequately consult with an employee prior to notification of dismissal despite the position not being required due to a legitimate down turn in business. This is most unfortunate when an employer has paid redundancy pay to employees and is having financial difficulties.

In uncertain times like we’re currently facing with the COVID-19 pandemic, employers must be mindful of all of their redundancy obligations particularly in the case of modern award and agreement covered employees. It is important that employers check their modern award and agreement obligations prior to implementing any workplace changes.

If you are unsure of your obligations or would like to know more please contact us and a Mapien consultant will be in touch within 24 hours.