Redundancies and JobKeeper

It is widely expected, at least so far as media speculation is concerned, that that the end of JobKeeper 1.0 and the beginning of JobKeeper version 2.0 on 28 September 2020 will cause a “bloodbath” of redundancies in Australia. While some businesses will no doubt cease to qualify for the wage subsidy because of the new rules (a demonstrable 30 percent reduction in GST turnover in the September 2020 quarter in contrast to the September 2009 quarter), businesses which cannot meet that test and will thus cease to be eligible will hopefully be in the minority.

There is no doubt though that the cessation of JobKeeper 1.0 will force some employers to shed staff. Accordingly it is an appropriate moment to reflect on the legal grounds for legitimate and lawful redundancies of Australian workers and to identify that the legal justification for a redundancy which cannot normally be challenged merely on fairness grounds. This is well illustrated by the following extract from a recent decision of the Fair Work Commission in an unfair dismissal case.

“The decision of Sams DP in Solari v RLA Polymers Pty Ltd 2 is relevant to the current circumstances. The decision considers a redundancy where the employer closed one of its two plants and only one employee was made redundant. That employee was a long-term employee of some 16 years. Sams DP found the respondent had a difficult choice to make on the basis of its operational requirements and its knowledge of the applicant’s skills and experience, and ultimately dismissed the applicant. Sams DP said:

“[15] It is perfectly understandable that the applicant would feel hurt, upset and even betrayed by the respondent’s decision to make him – and only him – redundant. It is also understandable that he believes he has the skills to perform the work of the other permanent employees. Most employees after 16 years service would feel they have the experience and knowledge to perform work across the broad spectrum of a company’s operations. This is a natural human reaction. However, when compared to others, this might not always be the reality. Ultimately however, it is the prerogative of Management to manage its business as it sees fit; subject to treating its employees fairly and honestly.

[16] Given the applicant’s 16 years of loyal and conscientious service (which I accept unreservedly), and the respondent’s genuine expressions of regret over the applicant’s redundancy (which I also accept), I have a great deal of sympathy for the applicant. However, sympathy alone does not overrule the legal position or the policy intent of the Act, which denies access to an unfair dismissal remedy where an employee’s termination of employment is a genuine redundancy, as defined. Any forced redundancy is always most regrettable and likely to have a severe impact on an employee and his/her family, particularly someone of the applicant’s age. This is, after all, why all employees are protected, in part, by redundancy payments under their relevant Award or Agreement and why minimum redundancy standards are now a legislated feature of the National Employment Standards (NES). I have no doubt that the respondent acted appropriately in that regard and, in fact, provided a greater period of notice than the Award provides.”

As noted, in the consideration of a redundancy, operational requirements is a broad term and involves the past and present performance of the business, the state of the market in which the business operates, steps that may be taken to improve efficiency by installing new processes, equipment or skills, or by arranging labour to be used more productively, and the application of good management to the business.

In this case, there is evidence of a downturn in business. The Respondent was entitled to take steps to improve efficiencies, which in this case resulted in a redistribution of duties across the organisation. Unfortunately, this left no duties for the Applicant in her job to perform, as all these duties were now performed by other staff. The Applicant at the time of her dismissal had only limited cases, which appear to have been taken on by other staff and the Director as a result undertaking case work. This is normal and expected where there is a business restructure, to protect the viability of the business.

It is worth noting that since the Applicant’s dismissal, the escalation of the global COVID-19 pandemic has resulted and suspended international travel. Given the Respondent’s business is to allow international students to travel to Australia to undertake education, this has undoubtedly resulted in further disruption to the business.

I consider that while some of the Applicant’s duties survived, the Applicant’s job was no longer required to be performed by anyone because of changes in the operational requirements of the Respondent’s business. The duties of the Applicant continued in a restructured form and in a falling market, with fewer clients.”

Mu v YES International Pty Ltd ATF YUAN Family Trust (2020) FWC 504899 delivered 18 September 2020 per Spencer C