Redundancy unfair after employer fails to consult

In brief 3 min read

The Fair Work Commission (the FWC) has found a failure to consult meant an employee who was made redundant missed out on receiving the JobKeeper wage subsidy, which could have kept her working for longer. Her dismissal was therefore unfair.¹

Key takeaways

• Employers should comply with their consultation obligation, which, under most awards, is triggered once a definite decision is made to introduce significant workplace changes, such as redundancies.
• Consultation should not be tokenistic, and will usually require a genuine discussion with employees who would be affected by the change about what measures could be implemented to minimise adverse effects of the change on the particular affected employee.

What was the dispute about?

Ms Freebairn worked as an administrative assistant three days a week at TJL Business Advisors and Accountants (TJL), splitting her time between TJL's Taree and Forster branches. TJL suffered a significant decline in revenue as a consequence of COVID-19. As a result, it sought to decrease its operational costs by reducing the hours of administrative staff and, in the case of Ms Freebairn, implementing redundancy.

Ms Freebairn filed an unfair dismissal application, arguing that her dismissal was unfair because TJL had failed to engage in proper consultation with her before making its decision to make her redundant. If TJL had engaged in proper consultation, Ms Freebairn may have had the option to work reduced hours and participate in the JobKeeper scheme. TJL sought to rely on the genuine redundancy exemption and argued that Ms Freebairn was not eligible to make the unfair dismissal application because her employment ended due to a genuine redundancy.

To rely on the genuine redundancy exemption, TJL needed to prove that it:

• no longer required Ms Freebairn's position to be performed by anyone;
• had notified her, and consulted with her, about the redundancy; and
• had made reasonable endeavours to redeploy Ms Freebairn.

Outcome – compensation

The FWC agreed that the dismissal was not a genuine redundancy because TJL failed to comply with its consultation obligations under the Clerks – Private Sector Award 2020 (the Clerks Award). The Clerks Award required TJL to consult with Ms Freebairn once it made a definite decision about her redundancy. Although TJL had advised its staff at various meetings that it needed to take measures to ensure the ongoing viability of the business, these meetings occurred without TJL making any definite decision.

The decision in relation to the redundancy was not made until 25 March, when TJL notified Ms Freebairn of the redundancy of her role. At this meeting, TJL did not adequately discuss measures to avoid or reduce the adverse effects of its decision. The fact that TJL told Ms Freebairn it had calculated that she would be marginally better off receiving JobSeeker payments than keeping her position was insufficient to satisfy the requirements under the Clerks Award.

Had TJL consulted properly with Ms Freebairn, an agreement may have been reached in which she worked reduced hours instead of her role being made redundant. She would then have been able to return to her normal working hours shortly after the introduction of the JobKeeper scheme. This occurred with other administrative staff who had had their working hours reduced. These circumstances led the FWC to conclude that Ms Freebairn's dismissal was unfair because it was harsh and unreasonable.

In calculating the compensation payable to Ms Freebairn, the FWC took into account the fact that TJL's Taree branch closed in May and, as a result, her position would have been made redundant anyway. Accordingly, her compensation was capped at what she would have received in wages up to May.