Redundancy consultations: All you need to know
A redundancy consultation must generally be performed by an employer when it intends to make an employee redundant. This must be done prior to ending their employment and employers are obligated to genuinely consult with the worker. If they do not, the redundancy could be found to be ingenuine by the Fair Work Commission if the worker makes an unfair dismissal claim.
In this article, we explain the right that you as an employee have to a redundancy consultation and what it involves. We also detail unfair dismissal cases that
Redundancy consultations: Your rights
To understand redundancy consultations, we must first define what a genuine redundancy is. The Fair Work Act 2009 outlines three criterion that make a redundancy genuine. Firstly, the individual’s job must no longer be required due to changes in the employer’s operational requirements. Specifically, they not only do not need the employee to perform the role, but anyone else too.
The second criterion is that prior to making an employee redundant, the employer must make a genuine effort to see if they can reasonably redeploy them within their organisation. Or to a role within an associated entity of the employer, for example, a customer’s or business partner’s organisation.
The third criterion of a genuine redundancy generally only applies to employees covered by a modern award or enterprise agreement. Most Australian employees fall into this category. However, to check if you are covered by an award or enterprise agreement, make sure to check your employment contract. This third criterion requires employers to undertake a redundancy consultation with the employee. Specifically, if a redundancy consultation is required by their award or enterprise agreement.
If employer’s do not comply with either of these obligations, the worker could have a good unfair dismissal claim to make with the Fair Work Commission. For instance, if an employee’s redundancy is justified, but the employer did not conduct a redundancy consultation with them, the redundancy could be ruled as non genuine.
What does a redundancy consultation involve?
The Fair Work Commission has stated that a redundancy consultation must be a genuine undertaken, and not something that is perfunctory. It typically involves the employer notifying the worker of the proposed change to their employment. As well as sharing information about the proposed change and its expected effects with the employee.
An employer is also generally expected to set up a consultation meeting with them to discuss the change and hear their thoughts. The employer must discuss with the employee the steps that can be taken to avoid and lessen the negative effects of the redundancy. An employer should also broach the topic of redeployment to another role within the organisation or an associate’s organisation.
If the employer fails to find reasonable redeployment for the employee, they will need to confirm the redundancy with the employee. They should set up a formal meeting with the employee and notify them in advance. This is so the employee can organise representation or a support person to also attend the meeting. After the meeting, the employer should confirm the employee’s redundancy in writing and provide details about any relevant redundancy payment.
Employees claim unfair dismissal after flawed redundancy consultation
An unfair dismissal case where a redundancy consultation process was the focus of proceedings is Williams & Others v Staples Australia Pty Ltd [2017]. The case involved business and office products company Staples, which had 1,700 workers across the country. This included a warehouse in Sydney, where there were around 160 employees, both casual and permanent.
Pertinent to this unfair dismissal case is that the employees fell under the Staples Enterprise Agreement 2014-2016. This required the company to perform a consultation with staff if redundancies were being considered. It also obligated Staples to involve its Joint Consultative Committee in the decision making process for any redundancies. The company, however, still had the right to make the ultimate decision.
Employees are made redundant
The key event in this unfair dismissal case took place in July 2016. This was when Staples decided to make 12 warehouse employees redundant. The company announced the redundancies at a Joint Consultative Committee meeting, and scheduled one-on-one meetings with each employee affected. All employees were subsequently provided with a letter outlining their impending redundancy. This stated that they would be considered for redundancy by use of a “selection matrix.”
Union complains about improper redundancy consultation
However, the National Union of Workers – the union of the employees – expressed to Staples that it had not conducted an adequate redundancy consultation with the workers. Despite this, the company went ahead with the redundancies. It sent a letter to all affected employees stating that they had been made redundant, unless they could be deployed elsewhere. They were told their employment would end on 20 July 2016 and were provided with a list of roles Staples was hiring for.
Of the 12 employees made redundant by Staples, three told the company that they did not want to be redeployed. These workers’ employment was therefore ended on 14 July 2016. Five of the workers said that they did want to be redeployed. However, Staples could not find suitable redeployment, so the employees were made redundant on 20 July. On the same day, the remaining seven workers were made redundant on a “non-voluntary basis.”
While all 12 workers were provided with their redundancy payments, four went on to make unfair dismissal claims with the Fair Work Commission.
Employer argues redundancy consultation was adequate
In its defence of the unfair dismissal claim made by the workers, Staples argued to the Fair Work Commission that the redundancies were genuine. It said that it had made the decision to make them redundant based on the operating costs and a decrease in the volume of work at the warehouse. Staples also said that while the redundancy consultation process was expedited, it met the obligations of the enterprise agreement.
The company stated that this was the case as it had conducted meetings with the Joint Consultative Committee and the workers. It stated that after consideration, the prospect of redeploying the workers was not reasonable because they lacked necessary skills and qualifications.
Unfair dismissal hearing: Redundancy consultation “unduly hasty”
In their unfair dismissal claim, the workers argued to the Fair Work Commission that their redundancy consultations did not satisfy the terms of the enterprise agreement. They also claimed that their redeployment was not properly considered by Staples. Also, that they had not been provided the chance to challenge their redundancies.
At the employees’ unfair dismissal hearing, the Fair Work Commission did not look favourably on Staples redundancy consultation process. It said that the redundancy consultation was “unduly hasty and largely tokenistic.” And that Staples “did not engage in genuine or meaningful consultation with its employees.” But instead “made disingenuous gestures which it sought to portray as consultation.”
The Fair Work Commission found that the employees were not made aware of the underperformance of the warehouse. And that they were informed about their redundancy on one day, followed by the confirmation of redundancy on the very next day. It was also found that the time frame provided for discussion and the provision of relevant information did not align with the obligations stipulated in the enterprise agreement. There was no time for meaningful discussion, which was a clear violation of consultation requirements.
Fair Work Commission rules dismissals were unfair
The Fair Work Commission also found that the employees were never invited to provide their views or discuss the impact of the change, nor were their views considered. This meant that the redundancy consultation process was essentially a one-sided communication. Also, that the Joint Consultative Committee was excluded from the decision making process regarding redundancies, which contravened the enterprise agreement.
In summation, the Fair Work Commission found that the redundancy consultations “were so significantly non-compliant as to be grossly deficient.” It therefore ruled that the redundancies were not genuine. And that the workers had been unfairly dismissed. As the Fair Work Commission deemed reinstatement of the employees to be inappropriate, it ordered Staples to pay them financial compensation. The company and employees were directed to come to an agreement regarding the amount of compensation.
Worker wins unfair dismissal for inadequate redundancy consultation
Another unfair dismissal case where an employee experienced an improper redundancy consultation is UES (Int’l) Pty Ltd v Leevan Harvey [2012]. The case involved warehouse manager Leevan Harvey who in October 2011 was made redundant by UES. This followed a contentious process. UES had experienced a notable decrease in its business. And as a result, was looking to curb the labour costs of the warehouse in which Mr Harvey worked. He was one of only three employees in the warehouse.
A UES manager set up a meeting with the three employees where he told them that they were at risk of redundancy. The manager explained the reason for the possible redundancies and discussed reduced hours, possible job sharing with the workers. Later at the unfair dismissal hearing, he told the Fair Work Commission that this discussion was met with a “rather hostile reaction” from the trio.
Worker chosen for redundancy because he was “slow”
Following the meeting, the manager told his superior that if anyone at the warehouse was to be made redundant it should be Mr Harvey. He said that the other two employees shouldn’t be let go as they were “the best performers by far.” And the manager said that Mr Harvey was “very slow” compared to the other two. The manager later spoke to UES’ HR department to recommend that Mr Harvey be made redundant.
Mr Harvey was on annual leave while all this was happening. And when he returned to work, he was called into a meeting with his manager where he was told of his redundancy.
“A serious matter:” Fair Work Commission finds fault with redundancy consultation
At Mr Harvey’s unfair dismissal hearing, the Fair Work Commission found that UES’ decision to choose him for redundancy “was not sound, defensible or well-founded.” It also found that the company had made numerous procedural lapses in the redundancy consultation process. The Fair Work Commission found that UES did not Mr. Harvey of the reason for his redundancy prior to making the decision to let him go. And that he was not given the chance to respond to the decision.
Because Mr Harvey fell under an award, the UES HR department advised the manager overseeing the redundancy to adhere to the proper redundancy consultation process. However, the manager himself admitted to the HR department that no consultation took place. The Fair Work Commission stated that his failure to consult with Mr Harvey was “not a trivial matter,” but rather “a serious matter.”
Fair Work Commission rules unfair dismissal
Ultimately, the Fair Work Commission ruled that Mr Harvey’s dismissal had been harsh, unjust and unreasonable. UES was therefore ordered to pay him $7,198.28 in compensation. However, UES later appealed the decision with the Full Bench of the Fair Work Commission. In its decision, it ruled that there was a valid reason to make Mr Harvey redundant. Namely, the downturn in sales UES was experiencing.
However, the Full Bench also found that UES did not conduct an adequate redundancy consultation process in line with Mr Harvey’s relevant award. His dismissal was therefore confirmed as unfair. But Mr Harvey’s compensation was decreased. In the end, UES was ordered to pay him of $1,365.38 gross plus 9 per cent superannuation.
Conclusion to: Redundancy consulation it matters
If the reason for your redundancy was it is not genuine. Or your employer did not provide an adequate redundancy consultation, you might be able to hold them to account via claim to the FWC. A Whole New Approach are highly experienced in helping workers take action through the Fair Work Commission. We are not lawyers but the nations leading workplace advisors and commentators.
For over thirty years we have assisted more than 16,000 Australian workers in every state and territory. With a private and free consultation, we can explain the eligibility criteria and how you can make an unfair dismissal application. Abandonment of employment and casual employees rights call us as well.
Make sure you act fast as the Fair Work Commission gives you only 21 days to make claim.
Call us today at 1800 333 666 for a confidential and complimentary consultation.
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