Redundancy Redeployments – What are the Employer Obligations?

One Minute Summary

The factors involved in determining whether a redundancy is genuine will include whether the job the employee was doing is no longer required, whether the employer consulted and whether there was the ability or opportunity for an employee to be re-deployed as an alternative to being made redundant.
The High Court decision has affirmed that the Fair Work Commission can take a broad approach in assessing whether an employer had deployment opportunities to prevent employees from being dismissed due to their position being made redundant.
In relation to re-deployment the employer needs to look past current vacancies (with the business and any related entities) and consider changes in how the business operates as to whether a redeployment opportunity will became apparent.
In relation to this decision the High Court stated that where an employer has contractors operating in the business, they need to assess whether those positions or that work can be undertaken by redundant employees.
The above factors are still governed by what is reasonable. However, the Court provides little guidance on what is in fact reasonable.

In a redundancy situation an employee cannot claim they were unfairly dismissed if the termination was a genuine redundancy. The Fair Work Act states that for a redundancy to be considered genuine:

The employee’s job is no longer required by the employer to be performed by anyone due to operational changes at the employer’s organisation.
The employer has consulted in accordance with the requirements of the applicable Award or Enterprise Agreement.
It would be reasonable in all the circumstances for the employee to be re-deployed to another role with the employer or with an entity associated with the employer.

This case examines point 3 concerning when it is reasonable in all the circumstances for an employee to be redeployed.

In June 2020 Helensburgh Coal determined that 90 direct employees were to be made redundant. Of these 90 employees 43 accepted a voluntary redundancy arrangement while 47 were forced redundancies. At the same time the company’s contractor workforce was also to be reduced by 40%. Of the 47 forced redundancies 22 submitted unfair dismissals. Their argument centred on that they should have been offered the roles undertaken by some of the remaining contractor labour force that were still engaged.

Step 1 – Fair Work Commission

During the initial hearings (and in a Full Bench appeal) in the Fair Work Commission the Commissioner stated it was it was feasible for Helensburgh Coal to insource work which had been undertaken by two contracting companies supplying labour to the operation.

Step 2 – Judicial Review – Full Court of the Federal Court

Helensburgh Coal sought a Judicial Review of the Fair Work Commission Appeal decision. The Court dismissed the Review stating that the genuine redundancy provisions of the Act (specifically point 3 above) can be interpreted broadly by the Fair Work Commission. It was appropriate to undertake a comprehensive analysis of what measures an employer could take including whether re-deployment, in all of the circumstances, would have been reasonable.

This included a proper analysis of whether the redundant employees could have been redeployed into specific roles then undertaken by contractors’ employees.

Step 3 – High Court Appeal

Helensburgh Coal appealed the Full Federal Court’s decision to the High Court. In its recent decision the High Court stated that ‘in all the circumstances’ is very broad and actually means “all” the circumstances. This means there is no restriction on how the Commission interprets the clause including whether it would have been reasonable, in all the circumstances, to redeploy an employee, who would have been made redundant, to undertake work performed by contractors.

The High Court’s decision indicates that this provision of the Fair Work Act should not be read down and limited. Therefore in reviewing an employer’s actions, the Commission can take a broad approach.

The Court stated there does not need to be a vacant position but that re-deployment only requires there be “work, or a demand for work, within the employer's enterprise or an associated entity's enterprise that could have been performed by the otherwise redundant employee.”

As a consequence of this decision the redundancies for the 22 employees were found not to be genuine redundancies as the employer had not taken a sufficiently comprehensive approach to redeployment into work undertaken by contractor employees.

While the key part of this decision related to replacing contractors with employees listed to be made redundant, the High Court took a broader view in assessing redundancies and redeployment. The Court’s decision indicates that there is no limitation in the Act on other factors may be considered in determining whether deployment ‘is reasonable in all the circumstances’. This may include future plans, business choices, contractor engagement terms, the overall development of an employer’s workforce, the exact nature of the contractor workforce engagement, the level of training required to upskill employees into roles held by contractors as well as other anticipated changes in the organisation.

It needs to be remembered the above clause is still preceded by what it ‘reasonable’. Unfortunately, ‘reasonableness’ is un-defined in the Act but one of the Justices does explore the concept. He indicates that if redeploying redundant employees results in the change in the nature of the business which is inconsistent with the original business then that would likely be unreasonable. Future decisions may provide further guidance on what is reasonable.

Commentary

What does this decision mean for employers in respect to redundancies and re-deployment?

It means that for a redundancy to be considered genuine employers must take a broad view on assessing potential redeployment opportunities.

Employers will no longer be able to simply assert that they gave consideration to current open and available roles within the organisation. They will need to seriously look at broader options inside their organisation as well as in associated organisations.

The Commission in assessing whether redundant employees could have been redeployed will be able to consider whether an employer could have made operational changes to ensure deployment was available. This could include whether the employer could have reorganised its workforce to create re-deployment opportunities. While this is said the question still remains whether such a change would be reasonable in each case.

If an employee challenges their redundancy termination through an unfair dismissal the employer may be required to produce evidence to show that person was not sufficiently skilled to undertake another role.

It is not unusual for employees to state “why was I made redundant and not John – I’ve been here much longer than he has”. This implies that being employed longer means they are more highly skilled – which may not necessarily be the case. However, can you disprove this assertion?

When planning for redundancies and assessing potential redeployments employers should document all considerations and assessments as they progress.

Employers considering making positions redundant should seek professional assistance to ensure all appropriate legal requirements under the Act and relevant Awards are adhered to.

Kind Regards
Michael Schmidt
M 0438 129 728
[email protected]
www.hunteremployeerelations.com.au