Failure to consult makes redundancy an unfair dismissal

In the recent decision of Sarah Cruise v Baxter Cassidy Pty Ltd T/A Ray White Langwarrin [2019] FWC 1751, the Commission found that an employer’s failure to consult with an employee caused the dismissal to be unfair and not a genuine redundancy.

The consultation process and termination

The employee had been employed for approximately 3 years as a part-time assistant property manager when the director of the business decided there was a strong business case for the employee’s role to be performed on a full-time basis.

The director consulted with the employee for approximately 2 weeks by:

• meeting with the employee on 3 August 2018 to explain why the part-time role was no longer appropriate for the business and advising the employee that she had the option of taking on a full-time role but, the alternative role would pay $5 less an hour and have no commission payments
• emailing the employee on 7 August, confirming his decision and setting out the proposed hours of work and salary for the new full-time role and requesting a response by 10 August.

On 8 August 2018, the employee emailed the director requesting additional information and a seven day extension of time to respond. However, the director did not respond. On 21 August, the employee sent a text message to the director proposing a meeting, however the employee never received a response.

On 24 August 2018, the director met with the employee and advised her that, as she had not accepted the full-time role, the business was making her redundant. He then provided the employee with a termination letter.

The employer did not comply with its consultation obligations

The Commission found that the employer did not comply with its obligations to consult with the employee under the Real Estate Award 2010 because the employer did not provide relevant details to the employee about the change or discuss the effect those changes were likely to have.

The Commission considered that this was particularly important in the present case. The employer clearly knew about the employee’s family circumstances and carer responsibilities. Job sharing with another employee and other similar arrangements might also have been canvassed by way of consultation.

The Commission also noted the significance of the employer’s failure to respond to the employee’s 8 August email or consider redeployment opportunities for the employee, noting that the employer did not realistically engage with the employee again until the brief discussion on 24 August, when the employee was told her employment was terminated with immediate effect.

Was the dismissal harsh, unjust or unreasonable?

The Commission found that the dismissal was harsh, unjust and unreasonable for the following reasons:

• While the Commission should not generally be involved in ‘second-guessing’ the decisions made by an employer, the available evidence provided little to substantiate the business case to support the need to restructure the employee’s position.
• The employee was presented with an alternative the employer was certain she would reject as there was no commission and a $5 an hour pay decrease.
• There was a failure to consult, including a failure to engage in meaningful discussion of the proposal.

The final amount of compensation awarded was $14,578.11.