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17 February 2017

FWC finds redundancies not genuine; reinstates four workers

The Fair Work Commission has confirmed its approach to deciding whether a dismissal is a genuine redundancy within the meaning of section 389 of the Fair Work Act 2009 (Cth) (FWA).

The Fair Work Commission has confirmed its approach to deciding whether a dismissal is a genuine redundancy within the meaning of section 389 of the Fair Work Act 2009 (Cth) (FWA).

In Paul Williams and Ors v Staples Pty Ltd [2017] FWC 607, four employees were reinstated when the Fair Work Commission found  their dismissals were not genuine redundancies under section 389. The dismissals were found to be harsh, unreasonable and unjust.

Following a decision to lower operating costs, the employer made 12 permanent full-time employees redundant. While the site as a whole was operating under budget, the warehouse unit (where the redundant employees were employed) had been consistently operating over budget for a period of 18 months.

The employer announced the decision to make redundancies on 11 July 2016 to a Joint Consultative Committee (JCC), which was required to be formed under the consultation provisions of the Enterprise Agreement (EA). The employer used a selection matrix to assess staff, and on 13 July 2016 informed 12 employees they were being made redundant.

The employer argued that the redundancies were genuine within the meaning of section 389 of the FWA because:

  • it no longer required the 12 jobs to be performed due to a decrease in the volume of work and an increase in operating costs;
  • while the process was expedited, the consultation requirements in the EA were met as meetings were held with the JCC and employees; and
  • it was unreasonable to redeploy the employees as they lacked the qualifications or skills to perform any of the other available positions in the business.

Four of the redundant employees disputed their redundancies, arguing that the dismissals were unfair because:

  • the consultation provisions under the EA were not met;
  • the employer had not properly explored redeployment options; and
  • there had been no opportunity to challenge the basis for their redundancy selection.

Commissioner Cambridge held that the employer’s manifest failure to comply with the consultation provisions of the EA and the redeployment requirements of the FWA were so ‘significantly non-compliant as to be grossly deficient’ and as such the dismissals were not genuine redundancies and were unjust, entirely unreasonable and harsh in the circumstances.

The Commissioner said the employer’s approach was unduly hasty, largely tokenistic and grossly deficient. The expedited process meant there was no opportunity for employees to give their views or discuss options to mitigate the adverse effects of the redundancies. Further, while the employer was obliged to involve the JCC in decision-making, the employees were not consulted about the composition or application of the selection matrix used to decide redundancies and there was no opportunity for the employees to challenge or review the selection matrix.

The Commissioner also found that the employer had overlooked realistic opportunities to contemplate redeploying the employees into one of the better performing areas of the business. This failure was highlighted by the employer hiring 19 new employees in December 2016 under provisions in the EA requiring the employer to increase the number of permanent employees at the site by 20 before the end of 2016. The Commissioner found that the 19 new employees had essentially been engaged in jobs that were made redundant when the 12 employees had been dismissed in July 2016.

This case illustrates that employers, when considering making employees redundant, need to engage in a genuine, fair and meaningful consultation process with employees. Making token attempts at consultation is insufficient. Proper consideration needs to be given to determining whether the employees can be redeployed into other areas of the business.

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