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A recent case in the Fair Work Commission highlighted the importance of following the proper process when making redundancies.

The case of Jody Tuchin v Mills Brands [2020] FWC 583 (7 January 2020) concerned the decision of Mills Brands to make one of its customer service employees redundant due to a restructure.

“Genuine redundancy”

The Fair Work Act 2009 (Cth) provides that in order to establish that an employee is being dismissed due to a “genuine redundancy” the employer must satisfy three requirements: (1) The employee’s job must be no longer required to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; (2) The employer must follow the consultation obligations in any applicable modern award/enterprise agreement; (3) The employee must be offered any reasonable redeployment opportunities in the employer’s business (or any of its associated entities).

Where an employer can demonstrate an employee has been dismissed due to “genuine redundancy” the employee will not be able to succeed in an unfair dismissal application. Although failure to demonstrate “genuine redundancy” does not automatically lead to a finding of unfair dismissal, it puts employers in a risky position and – as in this case – opens the doors for employees to argue there dismissal was unfair.

 

What happened in this case?

Mills Brands was able to demonstrate to the Fair Work Commission that it no longer required Ms Tuchin’s role to be performed by anyone due to a restructure, and thus was able to demonstrate that it satisfied the first limb of the genuine redundancy test.

However, the Fair Work Commission found that the employer fell at the second hurdle as it was not able to show that it had adequately consulted with Ms Tuchin.

Although the employer argued that it had discussed matters with Ms Tuchin prior to the decision to make her redundant, the Commission rejected this argument and found in meetings prior to the redundancy, the employer had only made general comments about forthcoming changes to the business, but failed to adequately address how those changes would affect Ms Tuchin personally.  The Commission noted that “what is missing is any specificity” about how the changes might have affected Ms Tuchin, and rejected the employer’s argument that the employee would be able to “infer that the general mention of a restructure meant that her job could be impacted”.

The Commission further found that the first Ms Tuchin learned about how the restructure would directly affect her role was when she was told in an unscheduled meeting that her role was being made redundant with immediate effect and she did not need to return to work.

In finding that Ms Tuchin’s dismissal was unfair due to the lack of consultation, the Commission made the following useful observations regarding the proper performance of a redundancy consultation:

“The dialogue between an employer and an employee ought to afford a proper opportunity to discuss the impact that a relevant significant change will have on an employee, and the employer must consider (though not necessarily accept) the employee’s concerns and/or proposed alternatives

Above all, the outcome of the restructure must not be preordained at the time the consultation takes place”

 

Lessons for employers

Even where it is clear that a redundancy situation exists – because an employer no longer requires a particular role to be performed and will not be replacing the employee performing the role – there is still a requirement that an employer follows a proper redundancy process in order to avoid the risk of a successful claim from the employee being made redundant. A key part of this process is properly consulting the relevant employees.

Our friends at Employment Innovations have produced a Redundancy Process Checklist to guide you through this process. If you require any further assistance please contact us.

 

About EI Legal

EI Legal is a specialist firm of employment lawyers. We act for businesses of all shapes and sizes, as well as for employees and HR professionals.  If you require any assistance in this area please contact us.

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