Although a failure by an employer to strictly comply with the consultation requirements of an applicable industrial instrument such as a modern award or enterprise agreement will prevent the employer from being able to rely upon the jurisdictional defence to an unfair dismissal claim of genuine redundancy (assuming the other statutory elements of it are available) that is not to say that an employer cannot successfully defend an unfair dismissal claim on the ground that the decision to terminate the employment of an employee was based on sound business management grounds justified by the economic considerations and a need to reduce staff numbers, and thus had a valid reason.
“CONSIDERATION
Preliminary findings
[15] The only remaining jurisdictional objection to the Application being determined by the Commission related to whether her dismissal was a case of genuine redundancy (s.389), as is pressed in the Letter from Angela Redzic dated 6 June 2024. Otherwise, I am satisfied that:
(a) The Applicant was dismissed at the initiative of the employer (ss 385(a) 386(1)(a));
(b) Her unfair dismissal application was lodged within the 21 day statutory time limitation found at s 394(2) of the Act;
(c) The Applicant is a person protected from unfair dismissal in that she had completed the minimum employment period set out in ss 382 and 383 of the Act; and
(d) Her dismissal was not a case involving the Small Business Fair Dismissal Code (s.385(c)).
Genuine Redundancy
[16] Section 389 of the Act provides:
“Meaning of genuine redundancy
(1) A person’s dismissal was a case of genuine redundancy if:
(a) the person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and
(b) the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.
(2) A person’s dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within:
(a) the employer’s enterprise; or
(b) the enterprise of an associated entity of the employer.”
[17] In the Form F3 Employers Response, the Respondent conceded that the Applicant was covered by the Hair and Beauty Industry Award 2020 (the Hair and Beauty Award). Clause 30 of the Hair and Beauty Award provides:
- Consultation about major workplace change
30.1 If an employer makes a definite decision to make major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees, the employer must:
(a) give notice of the changes to all employees who may be affected by them and their representatives (if any); and
(b) discuss with affected employees and their representatives (if any):
(i) the introduction of the changes; and
(ii) their likely effect on employees; and
(iii) measures to avoid or reduce the adverse effects of the changes on employees; and
(c) commence discussions as soon as practicable after a definite decision has been made.
30.2 For the purposes of the discussion under clause 30.1(b), the employer must give in writing to the affected employees and their representatives (if any) all relevant information about the changes including:
(a) their nature; and
(b) their expected effect on employees; and
(c) any other matters likely to affect employees.
30.3 Clause 30.2 does not require an employer to disclose any confidential information if its disclosure would be contrary to the employer’s interests.
30.4 The employer must promptly consider any matters raised by the employees or their representatives about the changes in the course of the discussion under clause 30.1(b).
30.5 In clause 30 significant effects, on employees, includes any of the following:
(a) termination of employment; or
(b) major changes in the composition, operation or size of the employer’s workforce or in the skills required; or
(c) loss of, or reduction in, job or promotion opportunities; or
(d) loss of, or reduction in, job tenure; or
(e) alteration of hours of work; or
(f) the need for employees to be retrained or transferred to other work or locations; or
(g) job restructuring.
30.6 Where this award makes provision for alteration of any of the matters defined at clause 30.5, such alteration is taken not to have significant effect.
[18] It is apparent that there are three relevant considerations arising from s.389. They are:
(a) Does the person’s job no longer exist;
(b) Was there consultation about the redundancy; and
(c) Was it reasonable in the circumstances to redeploy the person.
(a) Did the Applicant’s Job no Longer Exist?
[19] In Ulan Coal Mines Ltd v Howarth,4 a Full Bench of the Commission considered the meaning of the term “the person’s employer no longer required the person’s job to be performed by anyone” in s.389(1)(a) of the Act. In paying particular attention to the Explanatory Memorandum, the Full Bench observed:
“Explanatory Memorandum to the Fair Work Bill 2008 provides examples as to when a dismissal will be a case of genuine redundancy.
1547 Paragraph 389(1)(a) provides that a person’s dismissal will be a case of genuine redundancy if his or her job was no longer required to be performed by anyone because of changes in the operational requirements of the employer’s enterprise. Enterprise is defined in clause 12 to mean a business, activity, project or undertaking.
1548 The following are possible examples of a change in the operational requirements of an enterprise:
- A machine is now available to do the job performed by the employee;
- The employer’s business is experiencing a downturn and therefore
- the employer only needs three people to do a particular task or duty instead of five; or
- The employer is restructuring their business to improve efficiency and
- the tasks done by a particular employee are distributed between several
- other employees and therefore the person’s job no longer exists.
It is noted that the reference in the statutory expression is to a person’s “job” no longer being required to be performed. As Ryan J observed in Jones v Department of Energy and Minerals (1995) 60 IR 304 a job involves “a collection of functions, duties and responsibilities entrusted, as part of the scheme of the employees’ organisation, to a particular employee” (at p. 308). His Honour in that case considered a set of circumstances where an employer might rearrange the organisational structure by breaking up the collection of functions, duties and responsibilities attached to a single position and distributing them among the holders of other positions, including newly created positions. In these circumstances, it was said that:
“What is critical for the purpose of identifying a redundancy is whether the holder of the former position has, after the re-organisation, any duties left to discharge. If there is no longer any function or duty to be performed by that person, his or her position becomes redundant…” (at p.308)
This does not mean that if any aspect of the employee’s duties is still to be performed by somebody, he or she cannot be redundant (see Dibb v Commissioner of Taxation (2004) FCR 388 at 404-405). The examples given in the Explanatory Memorandum illustrate circumstances where tasks and duties of a particular employee continue to be performed by other employees but nevertheless the “job” of that employee no longer exists.”
[20] The Respondent’s evidence regarding the profound impact on their business was unchallenged. I accept that such impact was apparent and that a result of that downturn was that the Applicant’s job could no longer exist. It seems the Applicant herself was accepting of the circumstance when told on 19 March 2024.
(b) Was there Consultation about the Redundancy
[21] In Maswan v Escada,5 (“Maswan”), Vice President Watson found as follows:
“[39] In my view a decision to dismiss on account of redundancy will only be harsh, unjust or unreasonable if the rationale for the decision is seriously undermined or if there is a serious error in procedure such that renders the termination unfair in the circumstances. Here the decision appears open to the employer to make. The failure to consult is not a trivial matter. But as it is clear that consultation was highly unlikely to have negated the operational reasons for the dismissal or lead to any other substantive change, I do not believe that the failure to consult prior to the date of termination rendered the dismissal unfair. Given the evidence in relation to the operational need to restructure, I am of the view that it is likely that Mr Maswan would have been dismissed in any event, even if timely consultation had occurred.”
[Emphasis added]
[22] Having made a definite decision to introduce major change, the Respondent was required to meet its obligations to consult under the Hair and Beauty Award. While not a submission made by the Applicant, I find there was a failure to consult as required by the Hair and Beauty Award. However, as noted in Maswan, failure to consult does not necessarily render a dismissal unfair. The Respondent attempted on multiple occasions to meet with the Applicant to discuss her redundancy.
[23] In light of the above, it is extremely likely that Ms Exton would have been dismissed even if timely consultation had occurred. The Respondent is a small business employing only one other person, the Director of the Respondent. The lack of consultation pressed slightly by the Applicant is highly unlikely to have negated the operational reasons for her dismissal in the first place.
(c) Was it reasonable in the circumstances to redeploy the person.
[24] In Ulan Coal Mines Limited v Honeysett & Ors,6 the Full Bench found as follows in relation to deployment pursuant to s.389(2):
“It may be appropriate to make some concluding remarks about the operation of s.389(2). It is an essential part of the concept of redeployment under s.389(2)(a) that a redundant employee be placed in another job in the employer’s enterprise as an alternative to termination of employment. Of course the job must be suitable, in the sense that the employee should have the skills and competence required to perform it to the required standard either immediately or with a reasonable period of retraining. Other considerations may be relevant such as the location of the job and the remuneration attaching to it. Where an employer decides that, rather than fill a vacancy by redeploying an employee into a suitable job in its own enterprise, it will advertise the vacancy and require the employee to compete with other applicants, it might subsequently be found that the resulting dismissal is not a case of genuine redundancy. This is because it would have been reasonable to redeploy the employee into the vacancy. In such a case the exception in s.385(d) would not apply and the dismissed
employee would have the opportunity to have their application for a remedy heard. The outcome of that application would depend upon a number of other considerations.
Where an employer is part of a group of associated entities which are all subject to overall managerial control by one member of the group, similar considerations are relevant. This seems to us to be a necessary implication arising from the terms of s.389(2)(b). While each case will depend on what would have been reasonable in the circumstances, subjecting a redundant employee to a competitive process for an advertised vacancy in an associated entity may lead to the conclusion that the employee was not genuinely redundant.”
[25] There existed a genuine need to reduce the workforce of the Respondent. It was not a circumstance where redeployment of the Applicant could have been considered, given the exceedingly small nature of the business. The unchallenged evidence of the Respondent’s Accountant confirmed that.
Conclusion Regarding Genuine Redundancy
[26] For the reasons above I find that Ms Extons dismissal does not fall within the definition of a genuine redundancy in the Act because of the failure of the Respondent to comply with its obligations to consult over proposed terminations arising from changes at the workplace pursuant to the Hair and Beauty Award.
Whether the Redundancy was Harsh, Unjust or Unreasonable
[27] In considering whether a dismissal is harsh, unjust or unreasonable, the Commission must take into account each of the factors set out in s 387 of the Act. That section provides as follows:
387 Criteria for considering harshness etc.
In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, FWA must take into account:
(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and
(b) whether the person was notified of that reason; and
(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and
(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and
(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and
(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and
(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and
(h) any other matters that FWA considers relevant.
Section 387(a) and (b)
[28] The reason for termination was redundancy based upon the parlous state of the Respondent’s finances. While it is correct to observe that the Applicant was being investigated regarding her social media posts, with that being an investigation into the Applicant’s conduct, I am satisfied that the Respondent eschewed any reliance upon such conduct, to the financial benefit of the Applicant, and relied only upon redundancy. That was a valid reason for dismissal, and the Applicant was advised of that reason.
Section 387(c) and (e)
[29] As the investigation into the Applicant’s conduct was abandoned, this factor is not relevant.
Section 387(d)
[30] This factor was not an issue in this case.
Section 387(f) and (g)
[31] The Respondent was the smallest size employer possible, with only one employee being the Applicant. In my view the small size of the Respondent had an impact on the procedures adopted for termination and should be accommodated.
Section 387(h)
[32] A decision to dismiss on the ground of redundancy will only be harsh, unjust or unreasonable if the rationale for the decision is seriously undermined or if there is a serious error in procedure such that renders the termination unfair in the circumstances. The Respondent’s evidence regarding its financial position was unchallenged.
[33] While I have found a failure to consult pursuant to the Hair and Beauty Award, with such failures not being trivial matters, it is it is clear that any consultation would not have affected the Respondent’s decision due to the size of the Respondent.
[34] In all of the circumstances I am not satisfied that the termination of the Applicant’s employment was harsh, unjust or unreasonable.
Conclusion
[35] The Applicant’s dismissal was not a genuine redundancy due to the failure of the Respondent to comply with its obligations under the Hair and Beauty Award to consult over proposed terminations arising from changes at the workplace.
[36] The termination of his employment was not, however, harsh, unjust or unreasonable, as the decision was the result of a soundly based business decision. The failure to consult did not lead to a different result to that which occurred. Therefore, the failure to consult did not render the dismissal unfair.
[37] The application is dismissed.”
Exton v A&S Creative Style Pty Ltd [2024] FWC 1681 delivered 16 July 2024 per Cross DP