07 November 2012

Article by Ajay Khandhar, Tracey Jessie , Alice DeBoos , Kathy Dalton  and Duncan Fletcher 

Middleton’s Lawyers

Genuine redundancy – Have you really considered all available redeployment options?

Fair Work Australia (FWA) recently found that a Melbourne construction worker was unfairly dismissed, and not genuinely redundant, when a national company terminated his employment because his employer did not fully comply with its obligation to consider all available redeployment options.

Background

J Hutchinson Pty Ltd (Company) is a national company employing over 1,100 people and engaging 2,500 subcontractors, with a turnover of A$1.2 billion. It comprises several regional divisions, with human resources functions dealt with autonomously in each division, including Victoria.

On March 6 this year, the Company dismissed a worker from its Docklands project on the basis that the job he was doing was no longer required.

There was a vacancy or vacancies in the Company’s Queensland operations which the worker could have been engaged to fill. However, this information was not known to the worker’s Victorian managers at the time he was retrenched because they confined their enquiries on redeployment opportunities to the Victorian division.

Redeployment obligations

Section 389(2) of the Fair Work Act 2009 (Cth) provides that:

“A person’s dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within:

  1. the employer’s enterprise; or
  2. the enterprise of an associated entity of the employer.”

In Aldred v J Hutchinson Pty Ltd [2012] FWA 8289, the Company argued that it was not reasonable to consider redeployment interstate because:

  • its Victorian division was operationally distinct from other states and territories
  • the Company would incur a “significant” cost in the interstate redeployment of the worker.

Decision

FWA found:

  1. There was no contractual or statutory obligation for the Company to pay the worker’s relocation costs.
  2. It was not the worker’s responsibility to identify redeployment opportunities.
  3. It was reasonable for the Company to have made broader enquiries about interstate opportunities given the Company’s high level of administrative organisation and having regard to the size of the employer, the nature of the work performed by its employees and the national character of its business.

FWA decided there was no valid reason for the worker’s dismissal and the dismissal was harsh, unjust and unreasonable.

Lessons for the employer

An employee’s dismissal will be classified as an unfair dismissal rather than a genuine redundancy if the employer could reasonably have redeployed the employee within the employer’s enterprise or within an associated entity of the employer.

When considering redeployment options, an employer should not only consider roles that are the same as the position occupied by the employee at the time of their redundancy.

An employer must consider all available redeployment options in a redundancy situation, including redeployment options that involve:

  • a significant reduction in the relevant worker’s remuneration, responsibilities, duties and/or status
  • interstate opportunities that may exist within the employer’s enterprise or an associated entity of the employer.

An employer should keep good records and notes of the steps it has taken to consider whether there are any redeployment opportunities available.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.