Redundancy confusion opens door to ligitation

Cases

Redundancy confusion opens door to ligitation

Employers should have legitimate reasons for making employees redundant, but sometimes other events can confuse the picture. In the three cases noted the redundancies were not shams, but other events gave rise to misinterpretation.

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Employers should have legitimate reasons for making employees redundant, but sometimes other events can confuse the picture. In the three cases noted the redundancies were not shams, but other events gave rise to misinterpretation.

Cost cutting legitimate, but employer failed to consult


An employee who was made redundant was entitled to be treated in accordance with existing policies; and consultation in accord with such policies did not occur.  Hence the woman, who had 18 years continuous service, made an application for unfair dismissal remedy.

The employer genuinely needed to cut costs from the business and decided on 15 August 2013 to make the applicant redundant. On 22 August 2013 the applicant sent an email seeking a salary review. That afternoon she was advised the employer  had decided to implement a restructure that was ‘likely to have a significant effect’ on her employment.

The FWC found it was evident the applicant’s position was redundant and the redundancy was not a sham arrangement.

The employer had determined the applicant would be made redundant before any consultation process had commenced.

However, the FWC found the termination was not a case of “genuine redundancy” because of a lack of consultation. An award of 10 weeks compensation ($9,903) plus 9.25% superannuation on this amount ($916) was ordered.

C v Mega International Commercial Bank Co. Ltd [2014] FWC 5606 - Riordan C - 25 September 2014  

Casual positions created to cover rostering gaps


The employer conducted an organisational review and recommended the applicant’s position be made redundant.

Shortly after, two casual customer service officers were employed to cover rostering gaps. The applicant submitted that she could have been redeployed to a customer service officer role, but the employer submitted there were no positions vacant.

The FWC found there were no other positions available at the time that the applicant could have been redeployed to. On the balance of probabilities there were changes in the operational requirements that meant the respondent no longer required the applicant’s job to be done by anyone, however the dismissal was not a genuine redundancy.

The employer’s failure to consult was unreasonable therefore the applicant’s dismissal was harsh, unjust or unreasonable. Compensation of one week's pay, being $979 less appropriate taxation plus $93 to superannuation, was ordered.

Z v Goulburn Valley Imaging Group t/a G.V.I. P/L [2014] FWC 6606 - Gooley DP - 23 September 2014

Expiring visas justified retrenchment 


Three applications were heard together. The applicants were employed under a training visa.

The applicants agreed the employer’s business had been negatively affected by two cyclones and disease among the oysters.

Some of the applicants gave evidence they had been dismissed because of their nationality – one applicant gave evidence they had been replaced by backpackers. 

It was clear the employer’s financial situation had deteriorated. The FWC was satisfied the employer no longer required the applicants’ jobs to be performed by anyone and had complied with the relevant award in relation to consultation.

The employer submitted the applicants were selected because their visas were about to expire. There was no evidence the applicants were selected because of their nationality. The applications were dismissed.

O and Ors v The Trustee for Clipper Pearls Unit Trust t/a Clipper Pearls P/L [2014] FWC 6655  Williams C  26 September 2014

The bottom line: Employers should be careful to consult and document the process when implementing redundancies. Misinterpretation of events can occur and lead to litigation that could have been avoided.
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