Can we replace worker with more qualified applicant?


Can we replace worker with more qualified applicant?

What should employers do if they decide an existing position now requires the incumbent to have tertiary qualifications? Is it a case of redundancy, or could an affected employee claim unfair dismissal?


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Employers need to tread carefully if they decide an existing job requires the incumbent to have tertiary qualifications. If the requirement is challenged, employers need to ensure they have followed proper process. 

It has become increasingly common in some professions to introduce requirements for tertiary qualifications, particularly in areas where ‘on-the-job’ experience once sufficed.

For example, the federal government will introduce legislation this year requiring all new financial planners from 2017 to hold a degree, pass an exam and spend a year developing their professional skills. It may be that some existing staff do not have the relevant qualifications and are unlikely to get one. So what happens in this situation?

Complying with a Commonwealth law would justify a requirement that an employee possess the relevant tertiary qualifications to perform their job. But what happens where there is no such statutory requirement?

Would the current job be redundant? Could an affected employee successfully claim unfair dismissal if the duties are identical to those being performed by the more ‘qualified’ successor? 

What is considered redundancy?

Section 389(1) of the Fair Work Act defines the meaning of a ‘genuine redundancy’ to mean if:
  • the person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise
  • the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.
The Fair Work Act does not define the term ‘operational requirements’. It is a broad term that permits consideration of many matters including:
  • past and present performance of the business
  • the state of the market in which the business operates
  • steps that may be taken to improve efficiency by installing new processes, equipment or skills, or by arranging labour to be used more productively
  • the application of good management to the business.

Case law

The Fair Work Commission has determined a number of cases where employers have introduced a requirement an employee must possess the relevant tertiary qualifications to perform the job.

Generally, the commission needs to be satisfied the employer’s decision is based on objective criteria and not introduced as a means to ‘orchestrate’ a termination.

The following decision illustrates this point. A Fair Work Commission full bench ruled that despite a new position being the same in many respects as one which was being made redundant, a redundancy had occurred as higher qualifications were required to do the job.

New job differed from old one

A taxi company created a higher-level administrative position requiring certain qualifications. This resulted in a previously employed bookkeeper becoming genuinely redundant, despite the new role containing about 70 per cent of the duties of the previous one. The full bench found the bookkeeper had been made redundant under s389(1)(a) of the Fair Work Act 2009.
The commissioner at first instance ruled the changes were to an ‘existing and continuing role’ and so failed to satisfy the genuine redundancy definition.
However, the full bench disagreed, finding that the new position was not the same job as the redundant one:
"The [formal] qualifications required were reflective of new and higher level duties which were to be carried out by an appropriately qualified bookkeeper. Given the manner in which the matter proceeded, the commissioner was not in a position to set aside the appellant’s evidence in this regard…

"Contrary to the commissioner’s findings, we think the changes to the position… are operational changes. That is, they are changes that give effect to a change in the operational focus of a position to the benefit or advantage of the employer (be it to meet governance requirements or to improve efficiency)."
The full bench followed its decision in Ulan Coal Mines Limited v Howarth and Others [2010] FWAFB 3488. It was established that it didn't matter whether certain "discrete duties or tasks survive"; what was important was "whether the former position itself survives".
The full bench went on to say:
"On the unexamined and uncontested evidence before the commissioner, the job as it had been had become a more complex job at the higher end, requiring the exercise of duties by a person who was a qualified bookkeeper, which the respondent was not. The fact that a body of the former duties associated with the respondent’s position continued to be required to be performed in whole or in part is beside the point…

"Generally, we think the commissioner, because she took the view that because a certain volume of duties and tasks remained to be carried out and that as a result the position or job itself had not changed or been restructured to a sufficient degree to achieve another operational purpose, fell into error..."
See Mackay Taxi Holdings Ltd [2014] FWCFB 1043 (12 February 2014) 

What employers need to do          

In summary, where the employer introduces a requirement that an employee must possess relevant tertiary qualifications to perform their current duties, the employer would be required to prove to the Fair Work Commission, if challenged, that the new requirement:
  • resulted in the employer requiring a new more complex job to be performed
  • was genuine (i.e. not motivated by a desire to terminate the incumbent employee)
  • was objectively related to the employer’s operational requirements, and
  • was introduced following applicable consultation obligations.
The full bench referred the bookkeeper’s unfair dismissal application back to the commissioner to determine whether she could have been reasonably redeployed.

The Fair Work Commission would be required to consider the possibility of redeployment within the organisation and whether it was reasonable to offer retraining of the incumbent employee so he or she could meet the new tertiary qualification requirements. 

Where dismissal not deemed redundancy

Replaced by more qualified person
In a matter heard before (then) Fair Work Australia an employee’s position of financial controller was made redundant. The employer then hired a qualified accountant to a position titled ‘dealership accountant’.

The duties identified in the job advertisement for the new position were identical to those of the position made redundant. The employer placed considerable emphasis on the requirement of a tertiary qualification in accounting; however, the job advertisement did not specify this requirement. It was found this was not a case of genuine redundancy. See McIlwraith v Toowong Mitsubishi [2012] FWA 9662.
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