Dismissal for non-genuine redundancy may be unfair or not

Where an employee is dismissed on the basis of an alleged redundancy, but the employer cannot rely upon the jurisdictional defence of it being a “genuine redundancy”, for example because the employer did not comply with the consultation requirements of an applicable modern award or enterprise agreement, the dismissal may be regarded by the Fair Work Commission in an unfair dismissal case as relevantly unfair or not, depending upon the circumstances.

“As the respondent did not comply with its award obligations to consult with Mr Goto

about his redundancy, the requirements of s 389 have not been satisfied in this case. The

dismissal was therefore not a case of ‘genuine redundancy’.

[12] A finding that a dismissal was not a case of genuine redundancy does not necessarily

mean that the dismissal was unfair. Rather, the Commission proceeds to consider the unfair

dismissal application on its merits. Section 387 states that in considering whether it is satisfied

that a dismissal was harsh, unjust or unreasonable, the Commission must take into account the

matters in subsections 387(a) to (h).

[13] Where a person is dismissed for reason of redundancy, there is no ‘valid reason for the

dismissal related to the person’s capacity or conduct’ (s 387(a)). There was no concern about

Mr Goto’s capacity or conduct. The reason for dismissal in this case, redundancy, is considered

in connection with s 387(h), ‘any other matters the Commission considers relevant’, to which

I return below. Similarly, the considerations in ss 387(b) and (c) are not relevant. They concern

whether the employee was ‘notified of that reason’ (that is, the valid reason in 387(a)), and

whether the person was given an opportunity to respond to any such reason.

[14] The consideration in s 387(d) is whether there was ‘any unreasonable refusal by the

employer to allow the person to have a support person present to assist at any discussions

relating to dismissal.’ There was no such refusal in this case. Nor were there any discussions.

If a dismissal relates to unsatisfactory performance, s 387(e) requires the Commission to

consider whether the person has been warned about that performance prior to the dismissal. But

this case does not concern performance.

[15] The Commission is required to consider the degree to which the size of the employer’s

enterprise, and the absence of dedicated human resources expertise, would be likely to impact

on the procedures followed in effecting the dismissal (ss 387(f) and (g)). The respondent is a

small business employer, and these matters contributed to the unsatisfactory approach that it

took to the dismissal of Mr Goto.

[16] Section 387(h) states that the Commission is to take into account any other matters that

it considers relevant. My conclusions in relation to the ‘genuine redundancy’ jurisdictional

objection are relevant to the question of whether the dismissal was unfair. The respondent did

not need Mr Goto’s job to be undertaken by anyone. This was a legitimate reason to end his

employment in the circumstances. Even though the dismissal was not a genuine redundancy for

the purposes of the jurisdictional objection, it was nevertheless a real redundancy. Mr Goto said

that he was not previously aware of the business having any financial difficulties. But even

though he would have a good sense of business volume, Mr Goto did not claim to understand

[2023] FWC 2689

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the company’s overall financial situation. Mr Goto also said that he was paid above award rates,

and that his wage was not affected by the increase in award wages. But it was not just his wage,

or wages generally, that were causing difficulties, but also higher rent and interest rates. Mr

Chen said that he could no longer afford to employ a chef and that he decided to take over and

do the chef work himself. I accept this. Mr Chen had a good reason for Mr Goto’s dismissal.

This tells against a finding that the dismissal was unfair.

[17] However, it is also relevant to consider the manner in which Mr Goto was dismissed.

Under the Award, he was entitled to be consulted in a particular way. This did not occur. The

process leading to Mr Goto’s dismissal was deficient because the respondent did not comply

with the Award consultation requirements. Further, Mr Goto received only one day’s notice of

his dismissal, and he was dismissed by text. Even taking into account the fact that the

respondent is a very small business, the manner in which Mr Goto was dismissed was unfair. I

conclude that for this reason, the dismissal was harsh and therefore unfair.

[18] Section 390(3) states that the Commission must not order the payment of compensation

unless it is satisfied both that reinstatement is inappropriate, and that an order for compensation

is appropriate. Reinstatement is inappropriate in this case, as Mr Goto’s position has ceased to

exist and he does not seek reinstatement. In my view an award of compensation is appropriate.

[19] Section 392(2) states that in determining an amount of compensation, the Commission

is to take into account all the circumstances of the case, including the matters identified in

subsections 392(2)(a) to (g). As to the question of what effect any compensation order would

have on the viability of the employer’s enterprise (s 392(2)(a)), I accept that the respondent is

experiencing real financial difficulties. A significant compensation order might affect its

viability. As to Mr Goto’s length of service (s 392(2)(b)), I note that he had worked for the

company for over three years. Section 392(2)(c) of the Act directs the Commission to take into

account the remuneration that the person would have received if they had not been dismissed.

This requires the Commission to consider what would have occurred if the person was not

dismissed, and how long the person would have remained employed. This is a hypothetical

situation involving an estimation. However, given the company’s financial situation and the

fact that it had decided Mr Goto’s role was not required, I consider it likely that, had Mr Goto

not been dismissed on 10 July 2023, he would have been dismissed a short time afterwards.

[20] I assess this hypothetical situation from the standpoint that any subsequent dismissal of

Mr Goto would have occurred in accordance with the Award. If the respondent had made Mr

Goto redundant in compliance with its consultation obligations, it would have, among other

things, provided him with information in writing about his redundancy and the reasons for it

and discussed the situation with him. I consider that this would have taken one week. Mr Goto

said that if he had been consulted, he might have agreed to work part-time. But Mr Chen had

decided that he would do the chef’s work. I think it improbable that Mr Chen would have agreed

to have Mr Goto do all of the counter work that was later done by the part-time employees. This

was much lower-grade work, and although Mr Goto had done some such work, he was a chef,

and unlikely to be suited to a counter-based role. In any event, it was only after Mr Goto’s

dismissal that Mr Chen decided that he needed assistance with the counter work. I infer that he

realised this after having done the chef work himself for a period. If consultation had occurred

according to the Award, it would have taken one week. In my opinion, an order for one week’s

[2023] FWC 2689

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compensation is the appropriate amount of compensation in this case, having regard to s 392 of

the Act and all the circumstances.

[21] Mr Goto submitted payslips indicating that his gross weekly salary was $1057.60. I will

base my order for one week’s pay on this amount. I will add 11% in respect of superannuation,

which is $116.34, resulting in a sum of $1173.94.

[22] Mr Goto said that after his dismissal he looked for work, and that he has now found

alternative employment. I accept that in relation to the period in respect of which I will order

compensation, Mr Goto made efforts to mitigate the loss he suffered from his dismissal.

[23] Mr Goto asked that the Commission order the respondent to pay for his application fee

and pay him redundancy. However, the Commission has no power to make such orders. Further,

as to redundancy, s 121(1)(b) exempts small business employers from the obligation to make

severance payments under s 119 of the Act.

[24] I am satisfied that a remedy should be ordered in this matter. Reinstatement is

inappropriate, but compensation is appropriate in the circumstances. I will order compensation

to be paid to Mr Goto in the amount of $1173.94 with deduction of any taxation required by

law. This amount is to be paid by the respondent to Mr Goto within 28 days of this decision.

An order giving effect to this decision is separately issued in PR767259.”

 

Goto v Allen Aus Pty Ltd T/A Momo Sushi [2023] FWC 2689 delivered 16 October 2023 per Colman DP