Disclaimer: The directives in this article relating to the COVID-19 pandemic may no longer be in force. Please use caution if you are citing legislative material from this article as laws are subject to change. We recommend that you seek the most up-to-date law.
The Fair Work Commission has reaffirmed the importance of employers complying with consultation requirements when making employees redundant, even during Covid-19. Failure to consult with an employee about the significant changes to their employment means employers cannot rely on the genuine redundancy exception to unfair dismissal enquiries.
Legislative Requirements of Genuine Redundancies
The requirements to establish a genuine redundancy are set out under s 389 of the Fair Work Act 2009 (NSW):
- The employer no longer requires the job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise;
- The employer has complied with any consultation obligation in a modern award or enterprise agreement;
- It is not reasonable in the circumstances for the person to be redeployed within the employer’s enterprise or an associated entity.
Findings of the Fair Work Commission
The consultation requirement of genuine redundancies has been highlighted in two recent cases heard by the Fair Work Commission.
In Browne v MySharedServices [2020] FWC 4445, the employee (Browne) was dismissed over the phone without prior consultation by his employer (MySharedServices). The employer relied on genuine redundancy grounds for dismissal. The Fair Work Commission found that whilst operational changes to the business had occurred as a result of Covid-19, the consultation requirement had not been met. Under the relevant modern award (Clerks Award 2009), MySharedServices were required to consult employees on any change that may have significant effect on their employment, including termination. As the consultation did not occur and there were no issues with the employee’s performance, the Fair Work Commission found the termination was an unfair dismissal.
A similar situation arose in the case Freebairn v TLJ Advisors and Accountants (2020) FWC 3915, where the employer failed to consult the employee (Freebairn) about the termination of her employment as a result of firm restructuring post Covid-19. Freebairn filed for unfair dismissal on grounds that no consultation had taken place and that if consultation had occurred she could have arranged to work reduced hours until the JobKeeper scheme kicked in shortly after. As a result, the Fair Work Commission agreed the dismissal was not a genuine redundancy because of the failure to comply with consultation requirement.
Employers must comply with the consultation requirements
Employers must remain vigilant in upholding consultation requirements when implementing redundancies, even in the wake of mass organisational shifts as a result of the Covid-19 pandemic. Consultations must be genuine discussions about the changes to employment and explain how the employer intends to mitigate such changes. In particular, consideration must also be given to how JobKeeper and other Covid-19 relief schemes impact relationships between employers and employees in relation to organizational restructuring.
We represent both employers and employees, so if you or your organisation needs further advice or assistance in relation to redundancies or dismissals, please call Etheringtons Solicitors on (02) 9963 9800 or via our contact form