Redundancy and operational reasons

The following passage from a recent unfair dismissal case heard by the Fair Work Commission deals with the elements of the jurisdictional defence of genuine redundancy in a Covid context

“The Act does not define the term ‘operational requirements’. It is a broad term that permits consideration of many matters including:

  • 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.7

In Christina Adams v Blamey Community Group, 8  the Full Bench of the Commission stated that task under s.389(1)(a) of the Act in the following terms:

“… it is necessary to state at the outset that consideration of whether the employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the enterprise does not involve a merits review of the employer’s decision to make the person’s job redundant. It is not to the point that it may have been open to the employer to make a different operational decision which may have allowed the relevant employee’s job to be retained. As was stated in Low v Menzies Property Services Pty Ltd, “Whether it was objectively fair or justifiable to decide to abolish a position is beside the point, as long as the employer acted as it did because of changes in its operational requirements.” What s.389(1)(a) requires is for findings of fact to be made as to whether, firstly, the employer has made the decision that the relevant employee’s job is no longer required to be performed by anyone and, secondly, whether that decision was made because of changes in the operational requirements of the enterprise. If there was an ulterior motive for the decision – that is, if the real reason for the decision did not genuinely relate to any change in operational requirements, whatever the ostensible reason may have been – then it will not be possible to make the second finding of fact. However once these findings of fact are made, the element of the genuine redundancy definition contained in s.389(1)(a) is satisfied and no further inquiry is necessary.” 9

Section 389(1)(b) requires compliance with the consultation requirements where relevant of, in this case, a modern award. I will deal with the specific requirements of this provision and the modern awards later in this decision.

In terms of s.389(2) of the Act, a Full Bench in the Ulan Coal matter10 observed:

“[26] First, s 389(2) must be seen in its full context. It only applies when there has been a dismissal. An employee seeking a remedy for unfair dismissal cannot succeed if the dismissal was a genuine redundancy. In other words, if the dismissal is a case of genuine redundancy the employer has a complete defence to the application. Section 389(2) places a limitation on the employer’s capacity to mount such a defence. The defence is not available if it would have been reasonable to redeploy the employee. The exclusion poses a hypothetical question which must be answered by reference to all of the relevant circumstances.

[27] Secondly, it is implicit in the terms of s 389(2)(b) that it might be reasonable for an employee dismissed by one employer to be redeployed within the establishment of another employer which is an entity associated with the first employer. It follows that an employer cannot succeed in a submission that redeployment would not have been reasonable merely because it would have involved redeployment to an associated entity. Whether such redeployment would have been reasonable will depend on the circumstances. The degree of managerial integration between the different entities is likely to be a relevant consideration.

[28] Thirdly, the question posed by s 389(2), whether redeployment would have been reasonable, is to be applied at the time of the dismissal. If an employee dismissed for redundancy obtains employment within an associated entity of the employer some time after the termination, that fact may be relevant in deciding whether redeployment would have been reasonable. But it is not determinative. The question remains whether redeployment within the employer’s enterprise or the enterprise of an associated entity would have been reasonable at the time of dismissal. In answering that question a number of matters are capable of being relevant. They include the nature of any available position, the qualifications required to perform the job, the employee’s skills, qualifications and experience, the location of the job in relation to the employee’s residence and the remuneration which is offered.”

The approach adopted in the above matter should also be considered in light of the following comments of a later Full Bench11 of the Commission:

“[34] Honeysett is authority for the proposition that for the purpose of s.389(2)(b) it is sufficient if the Commission identifies a suitable job or position to which the dismissed employee could be redeployed. The Commission must then determine whether such a redeployment was reasonable in all the circumstances. We note that given the factual context the Full Bench in Honeysett did not need to consider whether s.389(2) may be satisfied if the dismissed employee could be redeployed to perform other work within the employer’s enterprise (or that of an associated entity.) Given its particular factual circumstances Honeysett is not authority for the proposition that it is always necessary to identify a particular job or position to which the dismissed employee could have been redeployed.

[35] As we have mentioned, the use of the past tense in the expression ‘would have been reasonable in all the circumstances for the person to be redeployed …’ in section 389 (2)(a) directs attention to the circumstances which pertained when the person was dismissed. As noted in Honeysett, ‘[T]he exclusion poses a hypothetical question which must be answered by reference to all of the relevant circumstances’. The question is whether redeployment within the employer’s enterprise or an associated entity would have been reasonable at the time of dismissal. In answering that question the Full Bench in Honeysett observed that a number of matters are capable of being relevant:

“They include the nature of any available position, the qualifications required to perform the job, the employee’s skills, qualifications and experience, the location of the job in relation to the employee’s residence and the remuneration which is offered”.

[36] We have earlier set out the submissions of the appellant and the respondent as to the proper construction of s.389(2) (see paragraphs [15] to [18] above). We accept the respondent’s submissions. For the purposes of s.389(2) the Commission must find, on the balance of probabilities, that there was a job or a position or other work within the employer’s enterprise (or that of an associated entity) to which it would have been reasonable in all the circumstances to redeploy the dismissed employee. There must also be an appropriate evidentiary basis for such a finding. Such an interpretation is consistent with the ordinary and natural meaning of the words in the subsection; the Explanatory Memorandum and Full Bench authority. We acknowledge that the facts relevant to such a finding will usually be peculiarly within the knowledge of the employer respondent, not the dismissed employee. If an employer wishes to rely on the ‘genuine redundancy’ exclusion then it would ordinarily be expected to adduce evidence as to the following matters:

(i) that the employer no longer required the dismissed employee’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise;

(ii) whether there was any obligation in an applicable modern award or enterprise agreement to consult about the redundancy and whether the employer complied with that obligation; and

(iii) whether there was a job or a position or other work within the employer’s enterprise (or that of an associated entity) to which it would have been reasonable in all the circumstances to redeploy the dismissed employer.

[37] The evidence in relation to (iii) would usually include canvassing the steps taken by the employer to identify other work which could be performed by the dismissed employee.” (Citations omitted)

It is clear on the above authorities that the justification for the dismissal – whether the employer no longer required the applicant’s job to be performed by anyone because of changes in the operational requirements, is to be assessed objectively based upon the evidence about the circumstances at that time. Further, although evidence of later events may be relevant to ascertain the veracity of the facts – such as whether the job is no longer required and what alternatives existed, the reasonable redeployment prerequisite is also to be assessed having regard to all of the circumstances in existence at that time and not based upon later developments not known or reasonably understood at that time. This frame of reference is important in this matter for reasons that will become clear.

I also add that whilst the COVID-19 pandemic has had a significant impact upon many businesses, their employees and the community more generally, in matters where the pandemic is relied upon by a party, the Commission should be careful to objectively judge the relevant circumstances based upon proper evidence. I have done so in this case.”

Claessen-Smith v Rivergum Homes Pty Ltd 2020) FWC 4318 delivered 17 September 2020 per Hampton C