The Redundancy Trap: Failing to Consult

November, 2015

By Clayton Payne, Special Counsel

If a worker’s position is likely to be made redundant, is the redundancy process straightforward? Do you need to consult with the worker before making their position redundant? And if so, what are the consequences if you do not?

These matters were recently examined by the Fair Work Commission.

The Facts

In McCormick v. Mt Pleasant Stud Farm, the worker was employed as a horse trainer under the Horse and Greyhound Training Award 2010 (Award). During a discussion with the owner of the employer in February 2015, the worker was dismissed from his employment.

It was alleged that the worker was told that he would be “finished up” and that his “position (had been) made redundant”.

The worker was later given a letter by the employer confirming that his employment had been terminated on the basis of a redundancy, after a “recent review by (the employer) of its operational requirements”.

A statutory unfair dismissal application was subsequently brought against the employer by the worker.

The employer objected to the application on the basis that the dismissal occurred as a consequence of a “genuine redundancy”, and that it had complied with the “Small Business Fair Dismissal Code” (Code) which applied to the employer as a “Small Business Employer”.

The worker alleged that the real reason for his dismissal was that he had previously injured himself at work, and more specifically, because of restrictions that were set out in his WorkCover medical certificate.

Deputy President Sams found that it was true that by late 2014 the employer did not require the worker’s position as a “trainer” to be performed by anyone.

However, the Deputy President did not accept that the employer had complied with the relevant consultation provisions leading up to a redundancy under the Award. It was noted that the decision to make the worker redundant only occurred around 24 hours before it actually happened.

While the employer’s owner claimed that he had an “informal chat’ with the worker at the end of 2014 about the higher costs of training horses on the farm as opposed to using external trainers, the Deputy President considered that this did not constitute appropriate “consultation” as required by the Award.

The Deputy President found:

“ … (the employer’s owner) describes that discussion as an “informal meeting”. Consultation requires more than an informal chat about future intention. Secondly, there was no evidence that the conversation included the impact on the applicant’s employment of the decision to no longer train horses at Mt Pleasant. There was certainly no discussion about the (worker’s) redundancy or the possibility of re-deployment options”.

Importantly, the Deputy President also noted:

(The solicitor for the employer) pleaded (the employer’s owner’s) lack of familiarity with his Award obligations and the (Fair Work) Act and he relied on … (the) business being a small business to justify (the employer’s owner’s) ignorance of the Award, the (Fair Work) Act and the Code. Such a submission is unacceptable … Pleading ignorance as an uninformed employer, simply does not ‘cut it’ ’”.

Noting his other findings, the Deputy President found that it was not necessary to determine whether re-deployment was available for the worker in the employer’s enterprise.

The Deputy President accordingly found that the worker’s dismissal was not a case of ‘genuine redundancy’ within the meaning of the Fair Work Act because the employer had not notified and consulted with the worker in accordance with its obligations under the Award.

The matter has been stood over to deal with the issue of whether the worker’s dismissal was unfair, and if so, as to the remedy which should be ordered.

Conclusion

This decision serves as a reminder that employers need to ensure that they meet with all appropriate consultation provisions contained in Modern Awards or Enterprise Agreements relating to workers, before seeking to make the employee redundant.

To do otherwise might not only expose an employer to the risk of being subjected to unfair dismissal claims, but as discussed in previous alerts, may also constitute Modern Award breaches. This can lead to the employer, and anyone “involved” in the relevant breach, being potentially held liable to pay substantial pecuniary penalties.

Contact Mills Oakley

For more information, please contact:

Ross Levin | Partner
Melbourne
T: +61 3 9605 0070
E: rlevin@millsoakley.com.au

Malcolm Davis | Partner
Sydney
T: +61 2 8035 7932
E: mdavis@millsoakley.com.au

Adam Lunn | Partner
Melbourne
T: +61 3 9605 0868
E: alunn@millsoakley.com.au

Lisa Anaf | Partner
Melbourne
T: +61 3 9605 0857
E: lanaf@millsoakley.com.au

  • Workplace Relations, Employment & Safety

  • Privacy Policy | Terms of Use