Unfair dismissal or genuine redundancy?

Many unfair dismissal cases are dealt with by the Fair Work Commission in circumstances in which the employee contends that the termination of his or her employment was unfair because the functions of the job survived the termination and continued to be performed by other employees thus leaving the employee’s job with nothing to do and thus redundant. This of course is a classic case of genuine redundancy provided that the employer can satisfy the Commission that it complied with the consultation provisions of any applicable modern award or enterprise agreement and that it was not reasonable for the employee to be redeployed elsewhere in the employee’s enterprise or any associated entity.

This is how the Commission deals with the issue under the Fair Work Act.

“On the material before me the respondent’s business is clearly affected to a substantial degree by the COVID-19 crisis, which was hardly challenged during the proceedings. It is an unwelcome reality which should have been apparent to all sides, and candid evidence should have been given about it. Clearly matters of profit and loss are relevant to any business, because they determine for example if the business becomes insolvent, or makes a profit and is able to continue, and a reduction in sales is a reduction in income for the business which can have a serious effect on the viability of the business. The reduction in sales is relevant, and I accept the evidence of Mr Lee that there was a reduction in sales, and that this is relevant. I also agree with the decision in UES (Int’l) Pty Ltd v Harvey, 11 in which the Commission said that the process for selecting individual employees for redundancy is not relevant to whether a dismissal was a case of genuine redundancy…………………………….The applicant also submitted in a supplementary submission that “Mr Senasekera’s job performed by someone else”. 18 The applicant also submits that another employee was not made redundant, Ms Mary Thi-Ha Li, and that the Consumer Affairs Agents representatives list provides that the respondent has 16 agent representatives, and that this means that “the reason for selecting the person is not logical or genuine”.19 In Ulan Coal Mines Limited v Henry Jon Howarth20 a Full Bench of the Commission said:

“[17] 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.

[18] In Kekeris v A. Hartrodt Australia Pty Ltd [2010] FWA 674 Hamberger SDP considered whether a dismissal resulting from the restructure of a supervisory team was a case of genuine redundancy. As a result of the restructure, four supervisory team leader positions were replaced by three team leader positions. The Senior Deputy President said:

“When one looks at the specific duties performed by the applicant prior to her termination they have much in common with those of two of the new positions in the new structure. The test is not however whether the duties survive. Paragraph 1548 of the explanatory memorandum makes clear that it can still be a ‘genuine redundancy’ where the duties of a previous job persist but are redistributed to other positions. The test is whether the job previously performed by the applicant still exists.” (at par [27])

[19] In the present case, the Commissioner appears not to have drawn an appropriate distinction in his reasoning between the “jobs” of the mineworkers who were retrenched and the functions performed by those mineworkers or take proper account of the nature of the restructure at the mine which led to an overall reduction in the size of the non-trades mineworker workforce. The Company restructured its operations in various ways including by outsourcing certain specialised, ancillary and other work and increasing the proportion of trade-qualified mineworkers in underground development and outbye crews. As a result, it was identified that there were 14 non-trades mineworker positions which were surplus to the Company’s requirements. The mineworkers whose employment was to be terminated were determined according to the seniority principle as provided in the Agreement. This did not mean that the functions or duties previously performed by the retrenched mineworkers were no longer required to be performed. It also did not mean that the positions of some of these mineworkers (e.g. in underground crews) did not continue, although those positions might after the restructure be filled by more senior non-trades mineworkers transferred from other parts of the operations or by trade-qualified mineworkers. However fewer non-trades mineworker jobs were required overall at the mine as a result of the operational changes introduced and, for this reason, the jobs of the 14 mineworkers selected for retrenchment could be said to no longer exist.

[20] These circumstances readily fit within the ordinary meaning and customary usage of the expression in s.389(1)(a) of the Act where a job is no longer required to be performed by anyone because of changes in the operational requirements of the employer’s enterprise.”

[23] Applying those observations to the present matter, the work was reallocated, but this is consistent with the bundle of duties performed by the applicant no longer being done by anyone, similar in nature to the circumstances cited by the Full Bench, in that overall numbers of employees dropped through redundancy or voluntary separation, because of operational difficulties of the business caused by the COVID-19 crisis economic downturn. This sort of reallocation of work is common in redundancies, and is compatible with the job being redundant. The test is not whether or not the work was reallocated, but whether the job the employee was doing is redundant. The fact that someone else is not made redundant, does not mean that a redundancy is not genuine. The respondent chose who was to be made redundant, as it was entitled to do. Overall given the reduction in sales and other indicia the job was redundant.”

Senasekera v First Choice Business Brokers Pty Ltd (2020) FWC 4312 delivered 17 August 2020 per Hamilton DP