Redundancy Defence to Unfair Dismissal

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As the economy continues in difficult times, employers are increasingly confronted with the possibility of making employees redundant.  How do you achieve this whilst still protecting yourself from a claim for unfair dismissal?  Alternatively, as an employee, what are your rights when it comes to being made redundant?

When does Unfair Dismissal arise?

Section 385 of the Fair Work Act 2009 (Qld) (“the Act”) provides that unfair dismissal arises when:

“(a)       a person has been dismissed; and

(b)       the dismissal was harsh, unjust or unreasonable; and

(c)       the dismissal was not consistent with the Small Business Fair Dismissal Code; and

(d)       the dismissal was not a case of genuine redundancy.”

Do Employers have a defence against a claim of Unfair Dismissal?

Employers may have a defence to unfair dismissal if a person’s dismissal amounts to genuine redundancy.  Section 389 of the Act provides that it will be a genuine redundancy if the employer can prove that:

“(a) 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;

(b) the employer has complied with any obligation in a modern aware or enterprise agreement that applied to the employment to consult about the redundancy.”

Further, the employer must prove that it was not reasonable in the circumstances for the person to be redeployed.

What are the consultation obligations?

An employer must comply with the consulting obligations in a relevant Modern Award or Enterprise Agreement.  Consultation obligations can include:

  • notifying the affected employees and their representatives (if any) when a definite decision has been made;
  • discussing the decision with the employees and their representatives (if any) as early as practicable after the decision has been made;
  • providing all relevant information (in writing) about the changes to the affected employees (including nature of the changes proposed, expected effects of the changes on the employees, and measures to avert or mitigate the adverse effects); and
  • giving prompt consideration to matters raised by the employees relating to the change.

Failure to comply with the consultation obligation may result in an unfair dismissal as the employer will not have a defence of genuine redundancy. The employer will then need to demonstrate that, not withstanding this failure, the dismissal is still “fair”.

Is it reasonable for a person to be redeployed?

If redeployment within the employer’s enterprise or the enterprise of an associated entity of the employer is reasonable in the circumstances, the dismissal will not amount to a genuine redundancy and the employer may not have a defence to a claim of unfair dismissal.  However, if such redeployment is not reasonable in all the circumstances, the employer may rely on the defence of genuine redundancy.

The Full Bench of Fair Work Australia in Ulan Coal Mines Ltd v Honeysett & Others [2010] FWAFB 7578 held that “it is an essential part of the concept of redeployment…that a redundant employee be placed in another job in the employer’s enterprise as an alternative to termination of employment”.

The Full Bench found that the following factors are relevant when considering whether it is reasonable for a person to be redeployed:

  • the job must be suitable (that is, the employee should have the skills and competence to perform it);
  • the location of the job in relation to the employee’s residence; and
  • the remuneration which is offered.

If an employer, after considering all the factors relating to redeployment, decides that it would not be reasonable in the circumstances for the person to be redeployed, then it may rely on the defence of genuine redundancy if a claim of unfair dismissal is made against it.

Do you have questions regarding a redundancy defence?

If you are an employer and are considering making a decision to dismiss any of your employees on the basis of redundancy, we recommend that you seek legal advice prior to making that decision to ensure that you meet all the requirements set out in the Act.  We can assist you with this.

If you have been dismissed on the basis of redundancy and you want to know if it might amount to unfair dismissal, early legal advice is essential as you only have 14 days from the date the dismissal takes effect to bring an application for unfair dismissal.  We can assist you with this.