This appeal decision of a Full Bench of the Fair Work Commission deals the importance of an employer’s consultation obligations in the context of relying upon the genuine redundancy defence in unfair dismissal cases.
“Appeal against decision [2025] FWC 1336 of Deputy President Slevin at Sydney on 14 May 2025 in matter number U2025/3076 – Definition of genuine redundancy – Whether size of employer’s business is relevant to compliance with modern awards consultation obligations for the purposes of deciding whether a dismissal is a case of ‘genuine redundancy’ – Modern award consultation obligations apply in the same way to all employers including small business employers – Consultation obligations must be met for employer to succeed with a claim that a dismissal is a case of genuine redundancy – Partial or substantive compliance is not sufficient – Technical non-compliance results in failure to meet obligations – Permission to appeal granted – Appeal dismissed.
Overview
[1]
Orientile Pty Ltd (Appellant/Orientile) has lodged an appeal under s. 604 of the Fair Work Act 2009 (FW Act), for which permission is required, against a decision of Deputy President Slevin issued on 14 May 2025 (Decision).1 The Decision concerned an application for an unfair dismissal remedy made by Mr Carson Q Zhang (Respondent/Zhang). Orientile objected to the application, asserting that Mr Zhang’s dismissal was a case of genuine redundancy as defined in s. 389 of the FW Act and in the alternative, that the dismissal was consistent with the Small Business Fair Dismissal Code (Code).
[2]
It was not in dispute that the Storage Service and Wholesale Award 2020 (Award) applied to Mr Zhang’s employment. In short compass, the Deputy President found that Mr Zhang’s dismissal was not a case of genuine redundancy because Orientile failed to comply with its consultation obligations under clause 30 of that Award which deals with Consultation about major workplace change. The Deputy President also found that the Code had no application as the dismissal was on the grounds of redundancy rather than Mr Zhang’s conduct.
1 [2025] FWC 1336.
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DECISION
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The Deputy President considered that a number of matters were relevant to whether the dismissal was harsh, unjust or unreasonable, including that the failure to consult meant that the Appellant did not canvas with other sales representatives their willingness to leave the business, so that Mr Zhang could remain employed.
[3]
It was concluded by the Deputy President that the dismissal was unfair, and Orientile was ordered to pay compensation to Mr Zhang in the amount of $31,652.93, representing a four week period during which a consultation process could have occurred and a further 12 weeks wages, arrived at by reference to the minimum redundancy payment Mr Zhang would have received if the Appellant had not been a small business, which the Deputy President considered an appropriate amount to recognise his long and loyal service and the impact of the loss of his employment.2 The Deputy President also ordered that the Appellant pay Mr Zhang superannuation contributions of $884.62, with all payments required to be made within 21 days. Orientile sought a stay of the Decision, which was refused by Vice President Gibian in a decision issued on 4 June 2025.3
[4]
The Appellant advances six grounds of appeal which in summary, assert that the Deputy President erred by: placing undue emphasis on a ‘technical breach’ of the Appellant’s consultative obligations under the Award in circumstances where the Appellant substantively complied with those obligations; failing to consider matters relating to the Appellant being a small business including its capacity to pay the compensation awarded and the impact of its size on the process it followed in making Mr Zhang redundant; denying the Appellant procedural fairness by requiring that the parties answer his questions during the hearing without giving the Appellant an opportunity to put submissions it sought to raise; relying on the scale of redundancy payments in s. 119 of the FW Act as a basis for calculating compensation in circumstances where that scale did not apply to the Appellant based on its status as a small business; failing to consider the Appellant’s ‘valid redundancy selection criteria’; and putting himself in the shoes of the Appellant by finding that it should have undertaken alternative steps such as ‘last on first off’, job-sharing and calling for a volunteer for redundancy.
[5]
After this decision was reserved Deputy President Roberts retired. The Full Bench was reconstituted with the addition of Deputy President Wright. The parties were informed that the Full Bench had been reconstituted, and that Deputy President Wright would read the material on the file and the transcript of the appeal, and participate in the decision-making process of the Full Bench. We commence by considering the Decision in more detail.
The Decision under appeal
[6]
The background facts set out in the Decision included that Mr Zhang was employed by Orientile as a sales representative from 5 July 2010 until his dismissal on 28 February 2025, a period of almost 15 years. Orientile is a small business having 9 employees, including three sales representatives, and sells imported tiles. Mr Zhang was the first sales representative employed by Orientile and commenced employment when the Company was in its infancy in terms of numbers of customers and sales.4 Mr Zhang’s evidence was that he helped to grow the
2 Decision at [134].
3 [2025] FWC 1526.
4 Transcript PN71.
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business by increasing its sales. From the commencement of his employment in 2005 until 2016 (other than for a 12-month period between July 2011 and August 2012 when a third salesperson was employed) Mr Zhang worked directly with the owner of the business, Mr Gao, who was also undertaking the role of a sales representative. At the time he was dismissed, Mr Zhang was one of three sales representatives employed by the Appellant (not including Mr Gao who was no longer filling a sales representative role).
[7]
On 28 February 2025, at or around 9.34 am, Mr Zhang was called to a meeting and was informed that Mr Gao had decided that morning that due to slow sales, the business could not afford to employ three sales representatives, and Mr Zhang was to be dismissed. The Deputy President found that Mr Gao went to the meeting with the intention of dismissing Mr Zhang. While there was a dispute about the duration of the meeting, which the Deputy President found nothing turned on, it was not contested that the meeting commenced with Mr Gao informing Mr Zhang that he was to be dismissed and that it continued with a discussion about what Mr Zhang was to be paid on termination of his employment. It was also not in dispute that Mr Gao offered to provide Mr Zhang with a separation certificate for the purpose of claiming social security benefits and a reference to assist him in finding other work. Mr Zhang declined this offer. Mr Zhang was then required to clear his belongings from the company car and hand over the keys. Mr Gao arranged an Uber to drive Mr Zhang home. Mr Gao did not give Mr Zhang written notice of termination. Mr Zhang received five weeks wages in lieu of notice and payment of his accrued leave entitlements, including long service leave.
[8]
In the hearing before the Deputy President, Mr Gao contended that the meeting on 28 February 2025 was a ‘consultation session’ about his decision to reduce the number of sales representatives from three to two and said that while there was another salesperson who was a candidate to be made redundant, because Mr Zhang did not challenge the decision, Mr Gao decided that he did not need to speak to the other salespersons about their willingness to be retrenched instead of Mr Zhang. Mr Gao also asserted that during the ‘consultation session’ on 28 February 2026, Mr Zhang was not interested in any ‘productive discussion on [the] dismissal proposal’ and sought to negotiate a financial settlement to recognise his contribution to the business.5 Other evidence given by Mr Gao in relation to compliance with the consultation obligations in the Award was that in various conversations with Mr Zhang between ‘late 2024 and early 2025’ he had stated that if sales did not pick up soon ‘we were all in big trouble’.6
[9]
The Deputy President first considered whether Mr Zhang’s dismissal was a case of genuine redundancy for the purposes of s 389 of the FW Act and identified that in order to reach a conclusion that there was no genuine redundancy, it was only necessary to determine whether Orientile complied with the obligation in the Award to consult about the redundancy. After setting out clause 30 of the Award, the Deputy President found that there had been no consultation with Mr Zhang prior to his dismissal, Orientile had failed to comply with the consultation obligations imposed by the clause, and that as a result, the dismissal was not a case of genuine redundancy. The Deputy President then proceeded to address the application of the Code and found that the dismissal was not consistent with the Code because the Code does not
5 Appeal book page 30, Outline of Respondent’s submissions to the Commission at first instance, paragraph 24.
6 Form F3 appeal book page 23.
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capture redundancy situations,7 and was therefore not relevant to the question of whether Mr Zhang’s dismissal was unfair.
[10]
Next the Deputy President considered whether the dismissal was unfair because it was harsh, unjust and unreasonable, having regard to the matters in s. 387 of the FW Act. Given that the reason for Ms Zhang’s dismissal was operational changes to the business and unrelated to his conduct or capacity, the Deputy President considered that the matters in ss. 387(a) – (e) were neutral. The matters in s. 387(f) and (g) were considered to weigh in favour of a finding that the dismissal was harsh unjust or unreasonable. In relation to s. 387(h), the Deputy President considered the following matters were also relevant to the question of whether the dismissal was unfair, and found that all but the last matter weighed in favour of a finding that the dismissal was harsh, unjust or unreasonable:
a)
The speed with which Mr Gao moved on the morning of 28 February 2025 from his decision that the business needed to make cost savings by retrenching one of its sales representatives to informing Mr Zhang that he was to be dismissed. These circumstances indicate a lack of consideration for Mr Zhang’s circumstances and the consequences of the dismissal.
b)
The fact that there were no conduct, capacity, or performance issues justifying Mr Zhang’s selection for retrenchment.
c)
Mr Zhang’s long service. He commenced employment almost 15 years ago when the business was starting up. He worked alongside Mr Gao and played an important role in the growth of the business.
d)
Mr Zhang was one of three sales representatives employed at the time of the dismissal. As there was no consultation Mr Gao did not canvass with the other sales representatives their willingness to leave the business which would have allowed Mr Zhang to remain employed.
e)
The failure of Mr Gao to engage in a consultation process in which he involved the other sales representatives also meant that there was no opportunity to explore other options, such as job sharing, voluntary redundancy, additional termination pay, or the development of agreed criteria for selection for retrenchment.
f)
Mr Gao paid Mr Zhang only his legal entitlements on termination. He was unwilling to entertain any additional payment in recognition of Mr Zhang’s long and loyal service. Making some additional payment would have reduced the adverse impact of the redundancy.
g)
The adverse impact of the dismissal on Mr Zhang and his personal financial circumstances.
h)
Mr Gao’s had formed the view that the business could not afford to keep employing three sales representatives and so someone had to lose their job.8
[11]
The Deputy President went on to conclude that:
[27] After considering each of the matters specified in s.387 of the Act, I find that the dismissal of Mr Zhang was harsh and unreasonable. Although, Orientile had a valid reason to make Mr Zhang’s position redundant, Orientile’s unreasonable and extensive failure to comply with its consultation obligations under the Award meant that Mr Zhang had no real opportunity to consider his possible retrenchment and present views and suggestions to Orientile to avoid or mitigate the adverse impact of the retrenchment. Many possibilities were available from job sharing with one or other, or both, sales representatives, to delaying the retrenchments to allow Mr Zhang to find other work, to seeking other savings in the business to avoid retrenchments. The alacrity with which the dismissal was carried out, the long loyal service of Mr Zhang, and his contribution to growing the business are also factors in finding the dismissal unfair.
7 Decision [15] – [16].
8 Decision at [ 25].
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[12]
The Deputy President next considered the matters set out in s 392(2) of the FW Act and the approach to assessing compensation in Sprigg v Paul Licensed Festival Supermarket,9 and determined the appropriate amount of compensation to be $31,652.93. In arriving at this quantum, the Deputy President considered that Mr Zhang’s 15 years’ service with Orientile was relevant to the amount of compensation he should receive, and went on to state:
‘…The question is how much should be attributed to this factor. This matter along with another matter that I consider relevant for the purposes of s 392(g), that Mr Zhang lost his job through redundancy and no fault of his own, and suddenly needed to make adjustments arising from his loss of livelihood after being so long in one job, lead me to conclude that he should be paid an additional 12 weeks’ pay or $23,076.92. This amount is arrived at by reference to s.119 of the Act noting that s.119 does not apply to small businesses but otherwise provides a guide to what compensation might be made to employees with long service. The amount of 12 weeks seems appropriate in this case to take into account his long and loyal service and his substantial contribution to the growth of the business as well as to take into account the loss of livelihood occasioned by his dismissal, the need to find an alternative income and the time it will take to do so.’
[13]
The Deputy President also found that if Mr Zhang had not been retrenched on 28 February 2025, he may well have been made redundant at the end of a proper consultation process, although this was not certain, and there were other means available to Orientile to cut costs. After estimating that a proper consultation process would have taken a period of four weeks given the need to consult with other salespersons and consider all options, the Deputy President awarded an additional four weeks’ pay to Mr Zhang in the amount of $7,692.31 and superannuation contributions in the amount of $884.62. The Deputy President accepted Mr Zhang’s evidence that his annual salary at the time he was dismissed was $100,000.00 plus superannuation.
Permission to appeal and public interest
[14]
An appeal under s.604 of the FW Act is an appeal by way of rehearing and the Commission’s powers on appeal are only exercisable if there is error on the part of the primary decision maker.9 There is no right to appeal. An appeal may only be made with the permission of the Commission. The Decision was made under Part 3-2 – Unfair Dismissal of the FW Act. Section 400(1) of the FW Act provides that permission to appeal must not be granted from a decision made under Part 3-2 unless the Commission considers that it is in the public interest to do so. The public interest test in s.400(1) is not satisfied simply by the identification of error or a preference for a different result.
[15]
The assessment of whether an appeal meets the public interest test at s. 400(1) of the FW Act is discretionary and involves a broad value judgment.10 The public interest might be attracted where: the issues are of importance and general application; decisions at first instance are diverse, justifying the guidance of a Full Bench; the decision at first instance manifests an injustice; the result is counter intuitive; or the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters.10
[16]
It will rarely be appropriate to grant permission to appeal unless an arguable case of appealable error is demonstrated. This is so because an appeal cannot succeed in the absence of
9 Sprigg v Paul’s Licensed Festival Supermarket (1998) 88 IR 21.
10 15 Glaxo Smith Kline Australia Pty Ltd v Makin [2010] FWAFB 5343, 197 IR 266 at [24]-[27].
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appealable error.11 However, that the Member at first instance made an error is not necessarily a sufficient basis for the grant of permission to appeal. In appeals relating to unfair dismissal matters, s. 400(2) modifies the principles in House v The King by providing that appeals on a question of fact can only be made on the ground that the decision involved a ‘significant error of fact’.12 A significant error of fact can be characterised as an error that vitiates the ultimate exercise of the discretion.13 It is well-established that s. 400(1) of the FW Act manifests an intention that the threshold for a grant of permission to appeal is higher in respect of unfair dismissal appeals than the threshold pertaining to appeals generally, the test is stringent,14 and that s. 400(2) evinces an intention of the legislature that appeals in unfair dismissal matters are more limited than appeals with respect to other matters.15
[17]
The Appellant in the present case submits that it is in the public interest to grant permission to appeal as the appeal would clarify the obligations of small businesses in relation to redundancy and consultation, prevent a substantial injustice to the Appellant, correct the misapplication of legal principles in the Decision, and help small employers navigating economic downturns.
[18]
We are of the view that the appeal raises a novel issue of whether consideration should be given to, and allowances made for, the size of an employer’s enterprise, in determining whether a dismissal is a case of genuine redundancy. We have decided to grant permission to appeal on that basis. We have also concluded that the Appellant has not demonstrated appealable error and we have determined to dismiss the appeal. Our reasons follow. However, before turning to consider the Appellant’s grounds of appeal, it is necessary for us to say something about consultation obligations in modern awards and enterprise agreements, and the concept of ‘genuine redundancy’ in the context of the legislative framework dealing with unfair dismissal.
‘Genuine redundancy’ as defined in s. 389
[19]
In the context of the legislative scheme dealing with unfair dismissal, the term ‘genuine redundancy’ has a defined meaning for the purposes of the unfair dismissal provisions in Part 3 – 2 of the FW Act. The defined meaning of the term ‘genuine redundancy’ is set out in s. 389 which provides that a person’s dismissal is a case of ‘genuine redundancy’ if:
•
The person’s employer no longer required the person’s job to be performed by anyone because of operational changes in its enterprise (s. 389(1)(a)); and
•
The employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about ‘the redundancy’ (s. 398(1)(b)).
[20]
There is an additional requirement in s. 389(2) which provides that the dismissal is not a case of genuine redundancy if it would have been reasonable for the dismissed employee to
11 Wan v AIRC (2001) 116 FCR 481 at [30].
12 Fair Work Act 2009 (Cth) s.400(2).
13 Gelagotis v Esso Australia Pty Ltd T/A Esso [2018] FWCFB 6092 at [43].
14 Coal & Allied Mining Services Pty Ltd v Lawler and others [2011] FCAFC 54, 192 FCR 78, 207 IR 177 at [43] per Buchanan J (with whom Marshall and Cowdroy JJ agreed).
15 Dafallah v Melbourne Health [2012] FWAFB 3540 at [25].
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be redeployed within the employer’s enterprise or an associated entity of the employer.16 As will be apparent, there is a distinction between the statutory definition of ‘genuine redundancy’ and the ordinary meaning of the term ‘genuine’ which includes authentic, real or bona fide. A dismissal may be the result of a position being genuinely redundant in the ordinary sense and may still be found not to be a ‘genuine redundancy’ within the statutory definition. This distinction can be the subject of confusion for unrepresented parties – both employers and employees – in unfair dismissal matters where the employee is said to be dismissed on the ground of redundancy.
[21]
The statutory definition of the term ‘genuine redundancy’ is significant for the purposes of the unfair dismissal provisions in Part 3 – 2 of the FW Act. Section 385 of the FW Act sets out the circumstances in which a dismissal is unfair. By virtue of s. 385(d) a dismissal that is a case of ‘genuine redundancy’ as defined in the FW Act, is not, and cannot be, an unfair dismissal. When an employee is dismissed on the ground of redundancy, and the dismissal is carried out in a manner that is consistent with the requirements in s. 389(1) of the FW Act, and subject to the requirements in relation to the reasonableness of redeployment in s. 389(2), the dismissal is a case of ‘genuine redundancy’ within the statutory definition, and the dismissed employee is excluded from making an unfair dismissal application under the provisions in Part 3 – 2 Division 3, and from the remedies for unfair dismissal in Division 4 of that Part. The exclusion applies notwithstanding that the dismissed employee is a ‘person protected from unfair dismissal’ in s. 382.
[22]
The effect is that an employer who dismisses an employee in circumstances where the dismissal is a case of ‘genuine redundancy’ within the meaning in s. 389 has a complete defence to an application for an unfair dismissal remedy made by the dismissed employee. The employer’s defence extends to the fairness of the process by which the employee was selected for redundancy as well as the dismissal itself and the way it was carried out.17 Conversely, where a dismissal is not a case of ‘genuine redundancy’ a person who is otherwise protected from unfair dismissal can make an application for an unfair dismissal remedy.
[23]
For the purposes of the first part of the definition of ‘genuine redundancy’ in s. 389(1)(a), a ‘job’ is ‘a collection of functions, duties and responsibilities, entrusted, as part of the scheme of an employer’s organisation, to an employee’.18 Where there has been a reorganisation or redistribution of duties and responsibilities undertaken by an employee, the question is whether the employee has ‘any duties left to discharge’.19 If there is no longer any function or duty to be performed by that person, his or her position becomes redundant.20 An employee may be dismissed because of redundancy, where duties or aspects of them, are outsourced and performed by contractors supplying services,21 or by employees of an external labour provider, or are absorbed and continue to be performed by a reduced number of
16 The term ‘associated entity’ is defined in s. 12 of the FW Act by reference to s. 50AAA of the Corporations Act 2001.
17 Adam Rojas v Salon & Barber Supply Co. Pty Ltd [2025] FWC 3894 at [13] per Saunders DP; Johnston v Blue Circle Southern Cement Pty Ltd (2010) 202 IR 121; [2010] FWA 5149 at [48] per Harrison SDP.
18 Jones v Department of Energy and Minerals [1995] IRCA 292 (16 June 1995), 60 IR 304 at 308, cited in Ulan Coal Mines Limited v Howarth and others [2010] FWAFB 3488.
19 Ibid.
20 Ibid.
21 Suridge v Boral Window Systems Pty Ltd T/A Dowell Windows [2012] FWA 3126 (Hampton C, 6 July 2012) at paras 73‒75.
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employees of that employer.22 These are the circumstances in the present case, where the Appellant decided to reduce the number of its salespersons from three to two, and that the owner of the business, Mr Gao, decided to take on some of the duties performed by the third salesperson, and to redistribute any residual duties to the two salespersons who were to be retained in employment. Mr Gao decided that the salesperson who would be dismissed on the ground of redundancy would be Mr Zhang.
[24]
However, a decision to make a job redundant does not necessarily result in a particular employee who is filling that job (or one of several similar jobs) being dismissed. The process of dismissing a person on the ground of redundancy has two steps. Firstly, the employer has decided that a job is ‘redundant’ within the meaning in s. 389(1)(a). The employer may have decided to outsource the work to external contractors or to reduce the number of employees doing the same job so that less work is performed or to restructure operations by allocating duties and tasks that were formerly undertaken by an employee to other employees and reducing the overall number of employees. It does necessarily follow that the person undertaking a particular job will be dismissed, although this may be the result. The second part of the process of implementing a redundancy is selecting the employee or employees who are to be dismissed on the ground of redundancy.
[25]
In contrast with dismissals by small business employers for reasons of conduct or capacity of the employee or for reasons justifying summary dismissal, where an employee of a small business23 is dismissed and the dismissal is said to be on the ground of redundancy and a case of genuine redundancy, the Code is not relevant.24 If a small business employer does not establish that the dismissal is a case of genuine redundancy, the question of whether the dismissal is unfair falls for determination under s. 387 of the FW Act, rather than the provisions of the Code. In summary, the Code does not provide a fallback position to allow a small business employer to plead that a dismissal is a case of genuine redundancy, and that in the alternative, the dismissal was consistent with the Code. This is because the Code applies only to dismissals for reasons of conduct or capacity of the employee or dismissals without notice for serious misconduct.
[26]
As we have earlier stated, a finding that a dismissal said to have been a case of ‘genuine redundancy’ does not meet the requirements in s. 389, does not automatically result in a finding that the relevant employee has been unfairly dismissed. Notwithstanding that the dismissal of an employee is not a case of ‘genuine redundancy’ within the meaning in s. 389, a position may have been made ‘genuinely’ redundant within the ordinary meaning of the term because of changes in the operational requirements of the employer’s enterprise.
[27]
An employee who is dismissed as a result of their position being made redundant is entitled to challenge the dismissal and to seek a remedy for unfairness under the legislative framework in part 3 – 2 of the FW Act if the requirements in s. 389 in relation to consultation and redeployment are not met by the employer, despite the fact that the reason for the dismissal is that the employer legitimately no longer requires the job to be done, or where the numbers of employees doing a job are reduced. The outcome of such an application may be that the
22 Dibb v Commissioner of Taxation [2004] FCAFC 126 (13 May 2004) at paras 43 – 44; (2004) 136 FCR 388.
23 A business with fewer than 15 employees calculated in accordance with ss. 23(2) – (4) of the FW Act, at a particular time.
24 Iannello v Motor Solutions Australia Pty Ltd [2010] FWA 3125.
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Commission is satisfied that the dismissal of a person is because the person’s role has genuinely been made redundant for the reason in s. 389(1)(a) – for example, the employer no longer requires the job to be done because of changes to its operational requirements – while at the same time not being satisfied that the employer complied with its consultation obligations under a relevant modern award or that the employer reasonably considered redeployment of the employee.
[28]
In such a case, while the substantive reason for a dismissal may be ‘genuine’ within the ordinary meaning of that term, failure to comply with the other requirements in s. 389(1)(b) and (2) will result in the dismissal not being a case of ‘genuine redundancy’ within the meaning in s. 389. The application will then fall to be determined by the Commission under s. 387 of the FW Act, having regard to the matters in s 387(a) – (h) relevant to whether the dismissal was unfair, because it was harsh, unjust or unreasonable. Notwithstanding that it is not a ‘genuine redundancy’ within the meaning in s. 389, a dismissal may nonetheless be found not to be harsh, unjust or unreasonable when considered in the context of the matters in s. 387. Conversely, a dismissal that is not a ‘genuine redundancy within the statutory definition may be found to be unfair based on a range of matters including the process by which the employee was selected for redundancy or the impact on the personal circumstances of the dismissed employee.
[29]
Section 389 does not provide the Commission with discretion to overlook non-compliance with a relevant consultation obligation and for the Commission to find that a dismissal is a case of ‘genuine redundancy’ based on partial, technical or substantive compliance by an employer, with an obligation in a modern award or enterprise agreement, to consult about ‘the redundancy’. For example, discussions which substantively deal with all the matters required by the consultation term to be discussed will not comply with the obligation to consult under a modern award consultation term if the discussions are conducted after an employee is informed that they are to be dismissed. Nor does the FW Act provide a particular regime for small businesses in relation to redundancy that reduces or limits their obligations under the Award to consult, where it is asserted that they have not complied with award obligations in this regard.
[30]
The Object of Part 3 – 2 of the FW Act, in which the provisions relating to ‘genuine redundancy’ are found, is to establish a framework for dealing with unfair dismissal that balances the needs of business (including small businesses) and the needs of employees and provides a ‘fair go all round’. The ‘genuine redundancy’ exclusion is one of the mechanisms by which the balance referred to in the Object of Part 3 – 2 is achieved. The ability to challenge the fairness of a dismissal is an important protection for employees. The FW Act speaks of persons who are ‘protected from unfair dismissal’. That protection is not removed based on partial compliance by an employer with the requirement to consult under a modern award consultation term.25
Modern award consultation term
[31]
The Award in the present case contains the model consultation term found in modern awards. The consultation term sets out rights and obligations for both employers and employees
25 Any applicable enterprise agreement is required to include a consultation term that requires consultation about matters listed in s. 205(1) and (1A). In default, a model consultation term in essentially the same terms as the term in modern awards, is taken to be a term of the agreement (s. 205)(2).
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where the employer has made a definite decision to implement a major change. Although award consultation terms are referenced in the definition of ‘genuine redundancy’ in s. 389 of the FW Act, those terms operate independently of that definition. An employer implementing a major change as defined in a modern award, affecting employees to whom the award applies, is required to comply with the term regardless of whether the employer later seeks to rely on compliance as a defence to an unfair dismissal application on the ground of ‘genuine redundancy’.
[32]
The obligation to consult as required by modern awards is triggered when 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. ‘Significant effects’ are defined to include termination of employment; major changes in composition, operation or size of the employer’s workforce or skills required; loss of, or reduction in job or promotion opportunities or job tenure; alteration of hours of work; the need for employees to be retrained or transferred to other work or locations, or job restructuring. The question of whether the affected employee(s) may be redeployed is a subject that should be part of such discussions.
[33]
Employers are required to commence discussions with employees or their representatives as soon as practicable after a definite decision to implement a major change has been made, and to provide relevant information in writing about the nature of the changes and their expected effects on employees likely to be affected. Further, the employer is required to discuss with those employees, or their representatives, matters including measures to avoid or reduce the adverse effects of the changes, and to promptly consider any matters raised by employees or their representatives about the changes.
[34]
Small businesses are not exempt from consultation obligations in modern awards. The fact that only one position is being made redundant does not exempt an employer from its consultation obligations. The decision to make a single position redundant in a small business is likely to affect remaining employees, particularly if the work undertaken by a person in that position will be redistributed among remaining employees. Conversely, the removal of a position from a workplace may also impact career progression and opportunities for remaining employees. Such a decision will also have a significant impact on the person to be dismissed as the result of a position being made redundant.
[35]
That there is no small business exemption from the obligations in the Award to consult employees about major workplace change is consistent with the significance of consultation to an employee whose position is being made redundant and who will be excluded from a remedy for unfair dismissal if the employer complies with those obligations. To obtain the benefit of the exclusion, an employer must comply and partial compliance does entitle an employer to the benefit of a shield from an unfair dismissal application.
[36]
The benefits of consultation about matters that may mitigate the loss of employment are likely to be more critical in the case of employees of small businesses and such employees should at least be provided with as much notice of the termination of their employment on grounds of redundancy as possible, given that small businesses are not required to pay redundancy payments set out in the scale in s. 119 of the FW Act to employees. Those payments are intended to tide employees over in circumstances where they are dismissed through no fault
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of their own, on grounds of redundancy, while they search for new employment or to compensate them for loss of personal leave credits or service that is not sufficient to entitle them to long service leave payments, and that they will need to commence accruing from zero when they commence new employment, given that accrued but untaken personal leave is generally not paid out to employees on termination of their employment. Redundancy payments required to be made by employers who are not small businesses compensate redundant employees for the loss of these benefits and cushion the blow of losing employment. There is no basis for reading down consultation obligations owed to employees of small businesses who are not entitled to a payment to cushion the blow of losing their employment.
[37]
It is trite that for the purpose of complying with obligations under the standard consultation term in modern awards (and enterprise agreements) consultation should be meaningful and engaged in before an irreversible decision to dismiss an employee has been made.26 Meaningful consultation occurs where the individual or group of employees affected by the change has a bona fide opportunity to influence the decision maker. It is not perfunctory advice from the decision maker in relation to what is about to happen.27 While the right to be consulted is not a right of veto, it is an important opportunity for employees whose employment may be terminated, through no fault of their own, to provide their views to the employer about how loss of their jobs may be avoided or mitigated.
[38]
The requirement in s. 389(1)(b) of the FW Act for the Commission to be satisfied that an employer has complied with ‘any obligation’ in a modern award or enterprise agreement that applied to the employee to consult an affected employee or employees about ‘the redundancy’ is an important protection for employees. The right to be consulted in a meaningful way so that employees have a bona fide opportunity to influence a decision maker is particularly significant to an employee who may be dismissed, and will have no right to make an application for an unfair dismissal remedy in the event that the Commission finds that the dismissal was a case of ‘genuine redundancy’.
[39]
The obligation to consult is not onerous. It is trite that small businesses, as defined in s. 23 of the FW Act, employ a small number of employees (fewer than 15) and are likely to have flatter management structures than larger businesses so that relationships between owners or managers and those they manage are more direct than is the case in larger businesses. It is also trite that consulting a small number of employees is less onerous than consulting larger groups of employees, and it is therefore likely that owners or managers of small businesses will be well placed to consult with employees about change. It is also likely that in circumstances where a definite decision to implement workplace change which will likely lead to redundancies has been made, management of a small business will have made the decision that triggers the consultation obligations, will have information of the kind that is required to be provided to employees readily to hand, and will be in a position to discuss the required matters. It is also likely that the number of employees who will be impacted by a major change in a small business will be fewer than would be the case in a larger business and that the scope for mitigating the effects of termination of employment by redeployment will likely be limited in the case of a small business. In the present case Mr Gao had only three salespersons and no capacity for
26 Construction, Forestry and Mining and Energy Union v Newcastle Wallsend Coal Company Print R0234 (AIRCFB) (1998) 88 IR 202 at [78] – [80]; Steele v Ennesty Energy Pty Ltd [2012] FWA 4917.
27 Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Vodafone Network Pty Ltd PR911257 14 November 2001 at [20].
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redeployment in his enterprise or an associated entity. It would have required little, if any, effort for Mr Gao to meet the obligation to consult Mr Zhang and the other two salespersons about all the matters he was obligated by the Award to discuss prior to initiating the termination of Mr Zhang’s employment on the ground of redundancy. As we discuss below, Mr Gao did not take any steps to even attempt to meet the Award obligations.
Consideration
[40]
The Appellant’s grounds of appeal are discursive and take the form of submissions. The appeal grounds were supplemented in the Appellant’s written and oral submissions at the hearing of the appeal and included new assertions about events prior to the dismissal. Appeal ground 1 as set out in the Form F7 Notice of appeal asserts errors of fact and law in relation to what is said to be the ‘excessive emphasis’ the Deputy President placed on procedural non-compliance with the consultation provisions under the Award, without adequate consideration of the employer’s status as small business with limited human resources capability. It is also asserted in ground 1 that the employer undertook ‘genuine real-time consultation in good faith’, consistent with is ‘operational constraints’.
[41]
This ground was also said to involve mischaracterisation by the Deputy President of consultation compliance because he incorrectly equated the Appellant’s lack of familiarity with the Award consultation term with substantive non-compliance. According to the Appellant, the Deputy President failed to have regard to the fact that only Mr Zhang’s position was impacted by the reduction in the number of sales representatives, that discussions took place with Mr Zhang immediately after the definite decision had been made, and another potential candidate for redundancy had been identified. These matters were said to establish that Mr Zhang’s dismissal was not predetermined. It was further contended that while procedural deficiencies may have existed (such as lack of written notice) these were ‘technical’ in nature and the Deputy President erred by finding that technical deficiencies rendered the redundancy not genuine, contrary to ‘established authority’ in relation to small businesses.
[42]
Mr Gao also asserted in oral submissions in the appeal, for the first time, that at the meeting on 28 February 2026, he specifically invited Mr Zhang to comment on his dismissal.28 Previously, Mr Gao’s evidence was that on being informed that he was dismissed, Mr Zhang did not ‘push back’ and instead argued about the amount of redundancy payment he should receive, and sought substantial amounts based on his asserted contribution to the business. Mr Gao initially said that it was this reaction by Mr Zhang that led Mr Gao to decide that it was unnecessary to talk to the other candidate for redundancy and to simply dismiss Mr Zhang.
[43]
Ground 1 identifies no errors of fact, much less significant errors, and nor does that ground identify an error of law or an error in the approach the Deputy President took to the matters he was required to consider. The Deputy President set out clause 30 of the Award at paragraph [12] of the Decision and it is not necessary that we repeat its terms. The clause is in the standard form for modern awards. In summary, the clause required the Appellant to give notice to Mr Zhang and to the other sales representatives (assuming they would have been affected) that Mr Gao had made a definite decision to make a major change that was likely to
28 Transcript of appeal hearing PN49 – 57.
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have a ‘significant effect’ on employees. For the purposes of the obligations in clause 30, ‘significant effect’ is defined to include termination of employment.
[44]
Relevantly, the evidence in the hearing before the Deputy President supports the findings of fact he made. The evidence can be summarised as follows. Mr Gao said that on 28 February 2025, he made a definite decision to reduce the number of sales representatives from three to two. Mr Gao thought about redeploying the sales representative he intended to dismiss but decided that there was no other role.29 Mr Gao did not provide anything in writing to Mr Zhang or the other sales representatives about the reduction in their numbers or the potential impact.30 According to Mr Gao, there were two candidates for dismissal, and Mr Gao spoke first to Mr Zhang because the other sales representative was out visiting customers.31 Mr Gao had not read the Award consultation term before he spoke to Mr Zhang,32 but contended that he went into the meeting with Mr Zhang with an open mind.33 Mr Gao also said that he did not speak to the other salespersons about the redundancy because it might affect their motivation,34 and because Mr Zhang did not object to the dismissal. Mr Gao also agreed that if Mr Zhang had challenged the dismissal during the meeting on 28 February 2025, he may have thought about withdrawing the dismissal.35
[45]
The fact that the Appellant is a small business, or that one employee was to be dismissed, does not diminish the significance of the change. The impact on a small cohort of employees by the removal of one of its members – in the present case from three to two salespersons amounting to a reduction of the workforce by 1/3 – may have the same impact as removing ten salespersons out of a group of thirty where work is to be absorbed by those who remain or there is to be some other change to their roles. The Appellant’s consultation obligations in clause 30 of the Award were engaged by the decision Mr Gao made on 28 February 2025. Mr Gao’s decision to reduce the number of salespersons from three to two affected not only Mr Zhang, whose employment was to be terminated, but likely those who remained in employment. In this regard, there was evidence of changes in the allocation of clients and areas each salesperson was required to service. These matters were relevant to all the salespersons, and the decision was likely to have a significant effect on Mr Zhang and the other salespersons.36
[46]
The discussions with Mr Gao and the other salespersons were required to be commenced as soon as possible after the definite decision was made. The Appellant was also required to provide information in writing to employees about the changes, their nature, expected effect and any other matters likely to affect them. Significantly, these discussions were required to address mitigation of the adverse effects of the changes on employees and measures to avoid or reduce those adverse effects. The employer was required to promptly consider any matters raised by the affected employees. As we have stated, the rights of employees under the Award consultation term are significant. It is no answer to the denial of those rights that even if the
29 Form F3 Employer response 1(b) Appeal Book page 23.
30 Transcript of hearing 9 May 2025 at PN201 – 202.
31 Ibid at PN188 – 193.
32 Ibid at PN196 – 199.
33 Ibid at PN206.
34 Ibid at PN215.
35 Employer response Form F3 in Appeal Book at page 24; Transcript from hearing 9 May 2025 PN255 – 256.
36 Transcript of hearing on 9 May 2025 PN215.
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employer had complied with the obligations in the clause, the outcome would not have been different, and the same employee(s) would have been dismissed.
[47]
We do not accept that the Deputy President placed excessive emphasis on procedural non-compliance. For the reasons we set out above, the procedural steps in the Award consultation term are important. They are directed at avoiding or mitigating the impacts of redundancy on employees and equipping employees with sufficient information to undertake meaningful discussions about the possible loss of their employment. As we have discussed above, consultation is of particular importance to employees of small businesses who are not entitled to the redundancy payments set out in the scale in s. 119 of the FW Act. Failure on the part of an employer to comply with consultation obligations in circumstances where major change is to be implemented denies employees the opportunity to have meaningful input into measures to achieve those objectives. It is also the case that the non-compliance of the Appellant in this case was not merely ‘procedural’ – it was non-existent.
[48]
It is difficult to envision circumstances where calling an employee to a meeting without so much as notification of the agenda and informing the employee that their position is redundant and they are to be dismissed can amount to meaningful consultation before an irreversible decision to dismiss that employee has been made.37 There was no evidence at first instance that Mr Gao informed Mr Zhang at the meeting on 28 February 2025 that if he argued against his dismissal there was another candidate who would be considered for redundancy. While Mr Gao made this assertion in submissions to the Commission at first instance and in the appeal, there is no evidence that he informed Mr Zhang that if he argued about his dismissal Mr Gao may change his mind about dismissing Mr Zhang. A former employer informing a dismissed employee, by reference in materials filed in the Commission in response to the employee’s unfair dismissal application, that if the employee had argued against dismissal at a termination meeting that the outcome may have been different, does not amount to the provision of a bona fide opportunity to influence the decision maker before an irreversible decision to dismiss is made.
[49]
The fact that Mr Zhang’s comments at the meeting were confined to a claim for redundancy payments is unsurprising given the circumstances he was in. Mr Zhang’s dismissal was presented to him at the meeting on 28 February 2025 as a fait accompli and the only issue left to discuss was whether he would be paid amounts in addition to the statutory entitlements. Even if we accept Mr Gao’s evidence about Mr Zhang’s focus on redundancy payments and his assertion that Mr Zhang was motivated to demand redundancy payments because he wanted to start his own business in competition with the Appellant, that evidence does not assist the Appellant’s case. We also note that Mr Gao’s evidence that there was another candidate for redundancy conflicts with his evidence that the two salespersons he retained in employment had skills that Mr Zhang did not have.
[50]
If Mr Gao’s evidence that there was another candidate for redundancy is accepted, it begs the question as to why Mr Gao did not speak to both Mr Zhang and the other candidate before deciding to dismiss Mr Zhang. A failure to do so is inconsistent with Mr Gao’s evidence that he had an open mind about Mr Zhang’s dismissal and the result was that the Appellant did not comply with its Award obligation to consult about the redundancy. Based on the evidence
37 Construction, Forestry and Mining and Energy Union v Newcastle Wallsend Coal Company Print R0234 (AIRCFB) (1998) 88 IR 202 at [78] – [80]; Steele v Ennesty Energy Pty Ltd [2012] FWA 4917.
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before the Deputy President, it is equally probable that the definite decision Mr Gao made on 28 February 2025 was to reduce the number of salespersons by dismissing Mr Zhang, and the reality was that nothing Mr Zhang could have said would have changed the outcome. In this regard, there is no evidence that Mr Gao actually informed Mr Zhang of the possibility that he may have changed his mind about dismissing Mr Zhang if he had disputed the dismissal during the 28 February meeting.
[51]
In any event, for the reasons we have given above, partial compliance with Award consultation obligations, which is deficient in either substance or form, does not result in a dismissal being a case of ‘genuine redundancy’ within the meaning in s. 389 of the FW Act, and an employer that does not comply with those obligations is not entitled to the defence against an unfair dismissal application, provided by that section. This is also not a case where the Award obligations were substantively complied with, and substantial compliance could have been taken into account under s. 387(h) in the overall consideration of whether other matters rendered the dismissal unfair. The reality is that what Mr Gao referred to as a ‘consultation session’ was a meeting where Mr Zhang was perfunctorily informed that his position was redundant and he was to be dismissed, and any discussion about the rationale for the decision was limited to Mr Gao informing Mr Zhang about the reasons for his dismissal after the event.
[52]
We do not accept that the Deputy President erred by equating the Appellant’s lack of familiarity with the Award as substantive non-compliance with the obligation to consult. Mr Gao agreed in response to questions from the Deputy President at the first instance hearing that he did not read the Award consultation term until after he had dismissed Mr Zhang and was preparing his response to Mr Zhang’s unfair dismissal application.38 On Mr Gao’s own evidence, it was apparent that he had not met the consultation obligations under the Award.
[53]
Notwithstanding that the Code does not cover dismissals on the grounds of redundancy, a Small Business Code Checklist is also available containing information to assist small business employers to identify the reason for dismissal: whether a dismissal is because of redundancy; for serious misconduct; or unsatisfactory conduct or work performance. Where the employer checks the box indicating that the dismissal is because of redundancy – the job was not required to be done by anyone because of operational changes – the Checklist directs the employer’s attention to questions relevant to whether the dismissal is a case of genuine redundancy: whether award consultation obligations have been complied with and redeployment considered. We note, as did the Deputy President, that Mr Gao signed a Small Business Fair Dismissal Code Checklist wherein he checked the boxes relating to redundancy and declared that he had complied with ‘any requirements to consult in the modern award …. that applied to the employment’.
[54]
It is not clear how Mr Gao could declare that that he complied with obligations in a modern award in relation to consultation, in circumstances where on his own evidence before the Deputy President he stated that he had not read the consultation term until he was preparing a response to Mr Zhang’s unfair dismissal application, and did not know about the existence of the consultation term, much less what his obligations were under that term, at the time he dismissed Mr Zhang. It also is notable that Mr Gao signed and dated the Checklist on 20 March
38 Ibid PN195 – 196; PN209 – 211.
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2025. Mr Zhang was dismissed on 28 February 2025 and filed his unfair dismissal application on 14 March 2025. The information at the top of the checklist states that the Checklist may be evidence of compliance with the Code in the event of an employee making an unfair dismissal application, and that while it is not a requirement of the Code that the Checklist be completed, the purpose of the Checklist is to help small business employers assess and record their reasons for dismissing an employee.
[55]
It is also stated in the Checklist that: ‘It is in the interests of the employer to complete the checklist at the time of dismissal and to keep it in case of a future unfair dismissal claim’ (emphasis added). Further, the introductory information at the top of the Checklist states that employers should read the Code before completing the checklist ensuring that they understand and meet their procedural obligations. The section of the Checklist dealing with ‘genuine redundancy’ would doubtless have assisted the Mr Gao to comply with Award consultation obligations. A checklist completed after a dismissal, and after the employer has been served with an unfair dismissal application, will likely be of limited relevance as evidence of compliance with the Code or that the dismissal was a case of genuine redundancy. As we have said, the Code is not relevant to dismissals for reasons of redundancy and in any event, it is clear from the evidence that Mr Gao failed to consult the Code or the Checklist before dismissing Mr Zhang and completed the Checklist after the dismissal.
[56]
It appears that Mr Gao based his declaration in the Checklist on his belief that the non-compliance was technical and that the ‘consultation session’ on 28 February 2025 constituted substantive compliance with the obligations which should have resulted in a finding that the dismissal was a case of genuine redundancy. There is no error in the weight (or lack thereof) that the Deputy President placed on the completed Checklist tendered by Mr Gao.
[57]
Nor did the Deputy President err by failing to consider the employer’s status as a small business with limited human resources capability. The short answer to this assertion is that the Award provision setting out obligations of employers to consult about workplace change does not excuse non-compliance on the ground that the employer is a small business with limited access to human resource management expertise, or that non-compliance on the part of an employer is partial or technical or that compliance is substantive. Similarly, s. 389 of the FW Act does not grant discretion to the Commission to make a finding that a dismissal was a case of genuine redundancy on the basis that consultation obligations have been substantively complied with or that any breach is procedural or technical. To the extent that matters such as the size of the employer’s business, or that the breach is technical, or that compliance is substantive, are relevant, those matters fall for consideration under s. 387 of the FW Act and are not relevant to whether the dismissal is a case of ‘genuine redundancy’ within the meaning in s. 389.
[58]
Where a dismissal is not a case of genuine redundancy within the meaning in s. 389 of the FW Act, the Commission may nonetheless find that the dismissal is not unfair when it is considered against the relevant criteria in s. 387. When a redundancy is bona fide or genuine in the sense that it is not a guise for a dismissal on other grounds, the Commission may accept that the rationale for the dismissal is valid and that consultation would not have changed the outcome, and subject to considering other relevant matters under s. 387(h), decide that on balance the dismissal is not unfair. The interaction between the provisions of Part 2-3 of the
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FW Act dealing with genuine redundancy and unfair dismissal aligns with the object of ensuring ‘a fair go all round’ is accorded to both the employer and the employee concerned.
[59]
We find no arguable case for error under appeal ground 1 and refuse permission to appeal on that ground. Appeal ground 2 takes issue with the Deputy President’s finding that the dismissal was harsh due to its speed and the absence of additional financial payments. It is also asserted that the ‘consultation meeting’ was incorrectly treated as an isolated event and regard was not had to discussions between Mr Gao and Mr Zhang in the lead up to the redundancy. It is further asserted in ground 2 that the Deputy President failed to weigh financial hardship to the Appellant and did not have regard to ‘mitigating steps’ including an offer of post-dismissal support and prompt payment of all statutory entitlements. There is no merit to this ground.
[60]
The speed at which the dismissal of Mr Zhang was carried out is a matter that goes to the fairness of the dismissal. The Deputy President considered that matter as being relevant to whether the dismissal was harsh, unjust or unreasonable under s. 387(h) of the FW Act. The Deputy President was correct to do so. As the Deputy President observed, the speed between Mr Gao deciding to dismiss Mr Zhang and implementing the dismissal indicates a lack of consideration for Mr Zhang’s personal circumstances.39 The ‘post dismissal support’ was no more than an offer to provide Mr Zhang with a statement of service. The fact that Mr Zhang refused this offer does not mitigate the unfairness of his dismissal.
[61]
The assertion that the Deputy President erred by treating the ‘consultation session’ as an isolated event is without merit. On Mr Gao’s own evidence, the discussions he claimed he held with Mr Zhang before 28 February 2025 about problems the Appellant was facing with respect to its financial position did not cover the possibility of Mr Zhang’s employment (or the employment of any other salesperson) being terminated. Mr Gao’s evidence was that Mr Zhang knew the market situation because he was a sales representative and that in ‘various conversations’ in late 2024 and early 2025 Mr Gao had told Mr Zhang that if sales did not pick up soon ‘we were all in big trouble.40 Making such statements to an employee in a role that is to be made redundant does not meet the consultation obligations in the Award. Mr Gao provided no evidence in his written statement or at the hearing of any consultation with Mr Zhang prior to the ‘consultation session’ on 28 February 2025 or that prior to dismissing Mr Zhang he had referred to the possibility of Mr Zhang’s position being made redundant. For the reasons we have given in relation to appeal ground 1, the so called ‘consultation session’ is a misrepresentation by Mr Gao of his interaction with Mr Zhang on 28 February 2025.
[62]
There is no error in the Deputy President disregarding the fact that Mr Zhang was promptly paid the statutory entitlements he was owed as being relevant to whether his dismissal was unfair. Mr Zhang was entitled to payment of the statutory notice period and his accrued long service leave. While delay or failure in relation to the payment of statutory entitlements to a dismissed employee may be relevant to the unfairness of a dismissal, prompt payment of those entitlements is both required and expected and is a neutral consideration. The fact that a dismissed employee is promptly paid amounts to which that employee is legally entitled does not mitigate against a finding of unfair dismissal. Nor can such amounts be offset against an
39 Decision at [25].
40 Form F3 Employer response to unfair dismissal application – Appeal Book page 23.
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award of compensation for unfair dismissal. Conversely, ex gratia payments made in addition to statutory entitlements may be relevant to fairness or compensation.
[63]
The assertion that the Deputy President failed to have regard to the Appellant’s financial status is also incorrect. The evidence before the Deputy President was that a significant contributor to the Appellant’s financial position was that Mr Gao had purchased another warehouse. In relation to the potential impact on the Appellant of an award of compensation to Mr Zhang, the Deputy President first informed Mr Zhang that he had sought compensation in a significantly higher amount than the Commission has jurisdiction to award and that the maximum Mr Zhang could receive was six months wages. On Mr Zhang’s evidence about his annual earnings, the Deputy President informed the parties of the potential for an award of compensation of a maximum of $50,000, with the further possibility that the amount would be reduced having regard to matters such as other income received by Mr Zhang following his dismissal.41 The Deputy President had the following exchange with Mr Gao in relation to the capacity of the Appellant to meet any order for compensation that may be made:
PN224
THE DEPUTY PRESIDENT: Nothing. All right. Mr Zhang, from your point of view, you’ve told me that the business was unprofitable. What impact would an award of compensation have on the business? Will it mean that you’ll have to increase your debt, or will it mean you’ll have to close the business down, or anything like that? What are the circumstances of the business? The question, essentially, Mr Gao, is, can you afford to pay compensation, or will you have to close shop?
PN225
MR GAO: I don’t close shop, but (indistinct) losing money pretty hard.
PN226
THE DEPUTY PRESIDENT: So you’d rather not pay $50,000, because that’d be hard, but it’s not going to mean you have to close the business up.
PN227
MR GAO: That’s correct.
[64]
The Deputy President also obtained from the parties their respective views about how long Mr Zhang’s employment would have continued had he not been dismissed. Mr Zhang’s view was that he would have continued to be employed for 5, 10 or 20 years, while Mr Gao’s position was that if consultation according to the Award had been undertaken, Mr Zhang’s employment would have lasted a further two weeks. The Deputy President assessed this aspect of the compensation awarded to Mr Zhang concluding that he would have remained in employment for a further four weeks had a consultation process been undertaken.
[65]
We reject Mr Gao’s submissions in the appeal to the effect that he was prepared to make further submissions at the hearing ‘if called upon in cross-examination’ to elaborate on points concerning the impact of interest rates and other economic indicators on the business and a conversation with Mr Zhang where he refused a request to provide Mr Zhang with a new vehicle due to the Company’s financial position. The Deputy President issued Directions prior to the hearing requiring both parties to file ‘documents and submissions’ they intended to rely on at the hearing.42 The Appellant complied with those directions and filed a seven page submission
41 Transcript of hearing 9 May 2025 PN220 – 222.
42 Appeal Book pages 55 – 65.
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which included figures said to show sales performance, responding to Mr Zhang’s material and addressing the elements of genuine redundancy including the process by which compliance with the consultation obligations under the Award was said to have occurred, and reference to case law.43 The Appellant also filed a document list and documents it relied on.
[66]
Contrary to Mr Gao’s submissions, he was not denied the opportunity to put his case to the Deputy President and nor was he informed at the outset that the parties were only required to respond to the Deputy President’s questions. The transcript of the proceeding records that at the commencement the Deputy President explained to the parties the difference between a hearing and a determinative conference, with the latter involving a process whereby he would guide them through the material they had filed, ask them questions and give them an opportunity to ask each other questions. Both Mr Gao and Mr Zhang who appeared in those proceedings agreed that a determinative conference should be conducted. The Deputy President also indicated that he would receive evidence and listen to any other matters the parties wanted to raise before making a decision.44 The Deputy President received all of the material filed by the parties including the Appellant’s sales figures, asked open questions about that material and invited Mr Gao to comment on the financial state of the business. As is evident from the transcript of proceedings, Mr Gao had a fair opportunity to respond to questions about the capacity of the Appellant to pay the maximum amount of compensation that could be ordered. The Deputy President had regard to that evidence and awarded an amount of compensation below the maximum that he had identified. Appeal ground 2 raises no arguable case of error and we refuse permission to appeal on that ground.
[67]
By appeal ground 3 the Appellant contends that the Deputy President’s improperly relied on the scale of redundancy pay in s. 119 of the FW Act to justify an award to the Respondent of 12 weeks’ wages and that this was an error of law, given the Respondent is a small business. It was also contended that the 12-week compensation component awarded to Mr Zhang is ‘duplicative’ as he was already ‘awarded’ long service leave equating to approximately 12 weeks wages. In oral submissions in the appeal, the Appellant asserted that the third ground constituted a significant error of law which caused the Deputy President to award compensation which was too high to be reasonable for a small business. It was further submitted that as the Deputy President stated, s. 119 does not apply to small businesses, and the effect of the decision was to impose a redundancy obligation on a small business. We do not accept the Appellant’s submissions on this ground for the following reasons.
[68]
Where an employer objects to an unfair dismissal application on the ground that the dismissal is a case of genuine redundancy, and the objection is not upheld, the application falls for consideration under the matters in s. 387 as to whether the dismissal is unfair because it was harsh, unjust or unreasonable, notwithstanding that the redundancy is bona fide in the sense that the job no longer required to be performed for the reason set out in s. 389(1)(a). Where the Commission concludes that reinstatement of a person is inappropriate, the discretion to award compensation is triggered. As the majority of the High Court observed in Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission and Others,45 the exercise of discretion involves a decision-making process in which no one consideration and no
43 Appeal Book pages 27 – 34.
44 Transcript of hearing PN3 – 12.
45 (2000) 203 CLR 194 at 204 – 205 per Gleeson CJ, Gaudron and Hayne JJ.
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combination of considerations is necessarily determinative of the result. The decision maker is allowed some latitude as to the choice of the decision to be made. That latitude may be considerable where the relevant considerations are confined only by the subject matter and object of the legislation, or narrow, where the decision-maker is required to make a particular decision if he or she forms a particular value judgment.
[69]
Section 392(2) of the FW Act confers a broad discretion to award compensation, requiring that the Commission take into account all the circumstances of the case. A broad range of matters are listed, followed by ‘any other matter that the [Commission] considers relevant. As the Deputy President correctly observed: ‘A compensation remedy is designed to compensate an unfairly dismissed employee in lieu of reinstatement for losses reasonably attributable to the unfair dismissal within the bounds of the statutory cap on compensation that is to be applied’.46
[70]
The amount of compensation comprised 4 weeks wages to reflect a period over which a consultation process consistent with the Appellant’s Award obligations could have been undertaken, and an additional amount of 12 weeks’ wages. In arriving at the amount of 12 weeks wages, the Deputy President referred to s. 119 of the FW Act, noting that while the redundancy payments specified in that section did not apply to employees of small businesses, it provided a ‘guide to what compensation may be made to an employee with long service’. The Deputy President also considered that this amount seemed appropriate in the circumstances of the case to take into account Mr Zhang’s long and loyal service, his substantial contribution to the growth of the business, the loss of livelihood occasioned by his dismissal, the need to find an alternative income and the time it will take to do so.47
[71]
There is no factual error in relation to the matters that the Deputy President considered warranted the further amount of 12 week’s wages. Mr Zhang had 15 years of service. That is a lengthy period of service. While Mr Zhang received his long service leave entitlements, he lost sick leave credits at an age when they are likely more valuable and would have been required to commence accruing such credits from scratch in any new employment he obtained. There was no evidence that Mr Zhang was counselled or warned about his performance during the period of his employment, other than Mr Gao’s view that more recently employed salespersons had more merchandising skills and motivation than Mr Zhang. We note that there is some doubt about Mr Gao’s evidence in relation to the skills of newer salespersons compared to those of Mr Zhang, given his statement that there was another candidate for redundancy.
[72]
While we accept Mr Gao’s submission that the business was not in its start-up phase when Mr Zhang was first employed, and that it had moved from Mr Gao’s garage to occupy two warehouse units, the evidence was that for the first six years of Mr Zhang’s employment, other than a 12 month period between August 2010 and July 2011, Mr Gao and Mr Zhang were the only salespersons employed by the Appellant. As the Deputy President also found, the failure to consult Mr Zhang meant that other options such as job-sharing or another salesperson volunteering to be made redundant instead of Mr Zhang were not explored. The haste with which the dismissal occurred added another level of difficulty for Mr Zhang. There is no evidence as to why Mr Gao felt it necessary to dismiss Mr Zhang immediately rather than
46 Citing Kable v Bozelle, Michael Keith T/A Matilda Greenbank [2015] FWCFB 3512 at [17].
47 Outline of Appellant’s submissions at first instance – Appeal Book page 27.
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informing him that dismissal was likely and allowing him a reasonable period to obtain other employment. These matters favoured an award of compensation above the amount necessary for a proper consultation process to have been conducted.
[73]
The Deputy President had regard to all the matters in s. 392(2) as he was required to do and applied the method of calculating compensation established in Sprigg v Paul Licensed Festival Supermarket (Sprigg).48 In this regard, the Deputy President’s approach was both orthodox and correct. We are also of the view that there is no error in the Deputy President using the provisions in s. 119 as a reference point in the circumstances of the case he was dealing with and the broad discretion he was exercising. It is well established that if the application of the Sprigg formula yields an amount which appears either clearly excessive or clearly inadequate, the Commission should reassess the assumptions made in reaching that amount. 49
[74]
In the present case, it is important to note that the Deputy President’s assessment of a four-week period for the purposes of assessing compensation, related to the time it would have taken for a proper consultation process consistent with the Appellant’s Award obligations, to be undertaken. The Deputy President specifically did not find that Mr Zhang would only have remained in employment for a further four-week period from the date he was dismissed. The Deputy President observed that while Mr Zhang may very well have been made redundant following a proper consultation period, this was by no means certain given other options such as job sharing or another employee volunteering to be made redundant instead of Mr Zhang. In all of the circumstances, it cannot be said that the amount of compensation awarded by the Deputy President is clearly excessive and there is no error in this respect.
[75]
Appeal grounds 4 and 5 assert what are said to be significant errors of fact which may be summarised as follows:
•
Failure to consider evidence of the Appellant’s valid redundancy selection criteria.
•
Failure to consider the fact that even if consultation with other sales representatives had been conducted, Mr Zhang would have been selected for redundancy due to shortcomings in his motivation and merchandising capability.
•
Procedural deficiencies in the consultation process stemming from the size of the Appellant’s business and lack of dedicated human resources expertise which did not affect the substantive fairness of the decision to make Mr Zhang’s position redundant.
•
Mischaracterization of the Appellant’s intent by the Deputy President proposing alternative redundancy approaches (voluntary redundancy and job sharing) which were impractical, inappropriate and contrary to the Appellant’s evidence and had no regard to the Appellant’s right to implement redundancies based on its operational needs.50
•
Requiring the Appellant to implement a ‘last on last off’ approach contrary to the decisions of the Commission establishing that an employer cannot be required to implement such an approach,51 and without consideration of the impact on staff morale and the risk that staff would leave their employment.
48 (1998) 88 IR 21.
49 McCulloch v Calvary Health Care (2015) FWCFB 873.
50 Darrell Kay v Fulton Hogan Construction Pty Ltd [2025] FWC 330.
51 Ibid.
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•
Failure to apply the established principle that the Commission should not substitute its judgement for that of the employer.52
[76]
These alleged errors of fact can be dealt with in short compass. The Decision discloses no errors of fact, much less significant errors. The validity of the Appellant’s selection criteria was not in issue. The issue was the failure of the Appellant to comply with its obligation to consult Mr Zhang and other salespersons about the redundancies including the selection criteria it intended to use. The fact that the criteria may have been valid does not excuse non-compliance by the Appellant with the consultation obligations in the Award. The Deputy President did consider the fact that Mr Zhang may have been selected for redundancy if consultation with other sales representatives occurred because of deficiencies in his work performance. There was no evidence of any such deficiencies or that they had been brought to Mr Zhang’s attention at any time prior to his dismissal. For the reasons we have developed above, the definition of ‘genuine redundancy’ is not qualified or applied to a lesser degree, and nor are procedural deficiencies excused based on the size of the employer’s enterprise. In the absence of proper consultation, the Appellant has not established that the dismissal was substantively fair, and it is unarguable that the dismissal was procedurally unfair. Contrary to the Appellant’s submissions, the Deputy President did not ‘mischaracterise the Appellant’s intent’ by referring to voluntary redundancy and job sharing. Those are precisely the kind of matters that the consultative obligations the Appellant failed to comply with are directed to, and which can be explored if those obligations are met. The Deputy President did not require the Appellant to implement a ‘last on first off’ approach and nor did he substitute his judgement for that of the Appellant. Rather, the Deputy President identified that the process followed by the Appellant did not allow for these matters to be explored and considered whether the dismissal was a case of genuine redundancy because of this failure, in an orthodox manner.
[77]
By appeal ground 6 the Appellant contends that there is a significant factual error in the Deputy President’s assessment of Mr Zhang’s remuneration for the purposes of calculating compensation claiming that Mr Zhang’s unsupported assertion that his annual remuneration was $100,000.00 plus superannuation was accepted despite no documentary evidence being submitted, over the Appellant’s evidence supported by a payslip showing that the annual salary was $65,000, with an hourly rate of $31.25 based on a 40 hour week. It was further asserted that after subtracting the ‘redundancy payment’ shown on the payslip, Mr Zhang’s actual year-to-date remuneration from 1 July 2024 to 28 February 2025 (including commissions and bonuses) amounted to $46,811, translating to an annualised remuneration of $70,216—approximately 30% lower than claimed. We reject this ground of appeal. There was evidence about Mr Zhang’s earnings which it was open to the Deputy President to accept and there is no error in this regard.
52 McCormick v The Vineyard Wine And Tapas Bar [2020] FWC 5946
[2026] FWCFB 162
23
Conclusion and disposition
[78]
For the reasons set out above, we order as follows:
A. Permission to appeal is granted.
B. The appeal is dismissed.”
Orientile Pty Ltd v Carson Q Zhang [2026] FWCFB 162 delivered 7 July 2026 per Asbury VP, Cross DP and Wright DP