Redundancy laws explained; Part 2

Yesterday I endeavoured to explain what constitutes a redundancy of a job or position and did so by drawing upon an excellent summary of the law from a recent Fair Work Commission case.

For the abolition of a job to be a genuine redundancy recognized by the Fair Work Act and thus be a complete jurisdictional defence by an employer to an unfair dismissal claim, three distinct elements must be established by an employer.

The first is that the particular job has been abolished and I dealt with that yesterday.

The second is that the employer has complied with the consultation obligations of any applicable modern award or enterprise agreement. It is this issue, which I am dealing with today.

The Fair Work Act (sec 145A) requires that all modern awards must contain a term which requires an employer covered by the award to consult employees about a change to hours of work and in practice all modern awards contain a clause which goes much further than that and requires employers to do so in the event of major workplace change which is likely to have a significant effect upon employees. All  enterprise agreements must (sec 205) contain such a clause.

Consequently almost all of the time, and unless an employer is confident that it is modern award and enterprise agreement free), it cannot rely upon the genuine redundancy defence to an unfair dismissal claim unless it has complied with the minimum consultation obligations which apply.

The second limb of what is required for that jurisdictional defence is however interpreted literally by the Commission, and if the circumstances of the termination of employment are not in fact covered by the precise terms of the modern award or enterprise agreement, then the employer will not be required to undertaken compliance. This is the issue at the heart of this extract from the same case I relied upon for yesterday’s post.

“Did the Respondent comply with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy?

[35] The parties accept that the Applicant was covered by the Clerks – Private Sector Award 2010 (Award).

[36] Clause 38 of the Award relevantly requires consultation after 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 phrase “significant effects” is relevantly defined to include “termination of employment”.

[37] The Respondent submits that cl.38 of the Award is not enlivened because:

(a) the “definite decision” made by the Respondent was to invest in its business development function, and to centralise administrative functions (expenses, updating phone lists, ordering supplies, and travel bookings) to its Melbourne headquarters. 30 This decision had no consequence on the senior employees, caused no disconnection to the Respondent’s design and construction work, and caused no internal disconnection for staff in the Sydney office. The decision was not a “major” one; and

(b) The decision did not have “significant effects on employees” as a collective. The decision ultimately resulted in one redundancy. The mere decision to declare one position redundant does not automatically trigger the consultation clause. 31

[38] Regardless of when the “definite decision” was made to make the Office Coordinator role redundant, the consultation requirements under cl.38 of the Award are conditional on the change being a “major” one that is likely to have “significant effects on employees”. Determination of whether the impugned change falls within this definition appears to be one of fact and degree. As White J said in Port Kembla Coal Terminal Ltd v CFMMEU 32:

“I do not regard a simple comparison between the number of employees to be terminated, and the number of the employees in its workforce overall … as being necessarily conclusive of the question of whether a change is “major”. Much may depend on the circumstances of a given case including, for example, the seniority and importance of the employees … , the extent to which … employees work in an integrated or disconnected manner; the consequences for the continuing employees of the redundancies and consequent terminations, as well as other matters”. 33

[39] It has been said that reference to the plural “employees” rather than “employee” in similarly worded clauses does not capture individual redundancies on the basis that individual redundancies do not constitute a “major change” to the Respondent’s operations that impact upon a collective of employees. 34

[40] In this case, there was only one redundancy. The effect of this redundancy is, in all the circumstances of the business, a minor change — other staff may have had to pick up administrative duties, but this could hardly be said to be a seismic shift in their day to day function. Moreover, the Business Development Coordinator role had already come into existence prior to the Applicant’s role being made redundant. The absorption and expansion of the Office Coordinator role did not fundamentally alter that employee’s responsibilities; it was merely to avoid duplicity.

[41] I can appreciate that the decision to make one employee redundant would be a “major” change to their personal circumstances. However, in this case, having regard to the legal authorities that are I am bound to follow, as a matter of law, such change for the Applicant is not the “major” change contemplated by terms of the Award. In view of the foregoing, I do not find that s.389(1)(b) is enlivened for determination in these proceedings beyond confirming my finding that, on the terms of clause 38 of the Award, by reference to the case law set out in this decision, the Respondent has complied with its modern award obligations as to consultation concerning the Applicant’s redundancy. 35”

Khoury v Vaughan Constructions Pty Ltd (2021) FWC 339 delivered 23 February 2010 23 February 2021 per Boyce DP