​Extension, then termination = genuine redundancy

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​Extension, then termination = genuine redundancy

Six employees of a coal mining company whose employment contracts were extended, then terminated, were genuinely made redundant, not unfairly dismissed.

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Six employees of a coal mining company whose employment contracts were extended, then terminated, were genuinely made redundant, not unfairly dismissed. Therefore, their application, supported by their union, for a remedy for unfair dismissal was rejected by the Fair Work Commission (FWC). The company was also entitled to hire contractors to complete a project that ran over its scheduled completion date, instead of reatining permanent employees.

[Full text of this case:  H v Helensburgh Coal Pty Ltd [2016] FWC 5471 (1 September 2016)]

History of dispute


Due to a downturn in the coal mining industry, the employer decided that it needed to restructure its business and this would include multiple redundancies, including the six employees involved in this case. This was intended to occur on 1 August 2015, and the employees were notified and consulted about the decision. The Construction, Forestry, Mining and Energy Union (CFMEU) claimed that the employer’s consultation process had not met the requirements of the relevant enterprise agreement. The agreement required the employer to review the position of any contractors working at the time, and the employer intended to retain some of its contractors while making permanent employees redundant. 

Because the employer had a current work project that was unfinished, the date of the redundancies was postponed until 31 December 2015, and the employees signed an agreement to that effect after discussions involving the union. The terms of the agreement included the statement that its terms resolved all matters previously in dispute. 

When it later became evident that the project would not be completed by 31 December, the employer arranged for a contractor to complete the work after that date. The employer claimed that it was normal business and industry practice to hire contractors for that type of work. It also claimed that the agreement said that the employees would be retained until 31 December 2015, not until the end of the contract. 

Agreement to defer redundancies was valid


The FWC held that the agreement to defer the employees’ redundancy date by 17 weeks to 31 December 2015 amounted to an agreed resolution of the parties’ previous dispute over consultation re redundancy and possible redeployment. It also provided the employees with four months extra work. By accepting the terms, the employees had agreed that they were genuinely redundant. They did so in good faith, without duress, and after accepting advice from the union. 

Redeployment of the employees to complete the delayed project instead of using contractors was not viable or logical in the circumstances, because a close-down in December/January meant the employer would have had to pay the employees for six weeks without them being able to do any work. As the work was “non-core” work, using contractors to complete it was a reasonable option.

For the above reasons, termination of the six employees amounted to genuine redundancies, therefore their claim of unfair dismissal was dismissed.

 H v Helensburgh Coal Pty Ltd [2016] FWC 5471 (1 September 2016)
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