Bill Fitzgerald

AMMA principal employee relations consultant Bill FitzGerald examines the issue of consultation in regards to redundancy, following a recent decision rejecting claims of adverse action and accepting an employee was dismissed for financial reasons.

A recent decision handed down by the Federal Circuit Court serves as a timely caution to AMMA members that the process of dismissal should be carefully considered and advice sought before taking redundancy action.

In this case, a country club board of directors voted in favour of making redundant the position of an administrative manager, who later filed an unfair dismissal application on grounds of adverse action. In particular, the employee argued that the employer took adverse action when it:

  • Dismissed her;
  • Gave no warning or notice;
  • Failed to comply with award requirements to consult her on major workplace change; and
  • Terminated her in a ‘peremptory’ fashion when she was escorted off the premises and directed not to speak to other employees or board members before leaving.

Judge Shenagh Barnes dismissed most of the employee’s contentions, save for one relating to the club’s failure to provide her written notice on the day.

The judge said she was satisfied the board members who voted to cut the manager’s and one other position did not take adverse action for a prohibited reason.

“They each gave evidence, which I accept, that the reason they each voted in favour of the proposal was because of the financial circumstances of the Club,” Judge Barnes said.

The judge continued that there was also no basis to suggest ‘they had each in some way prejudged the outcome of a meeting of the Board, or that the manner in which the employee was dismissed from her employment on the grounds of redundancy was for a purpose that included a prohibited purpose that related to the fact that she had or had exercised workplace rights or to prevent her exercising workplace rights’.

The judge said the that while some individual board members, including the president, had formed the view that the employee’s position should be made redundant before their monthly meeting, the adverse action claim ‘has to be seen in light of the fact that there could be no redundancy until there was a decision to this effect by a majority of the Board members in favour of the redundancy’.

In rejecting the employee’s claim that she was unlawfully dismissed without warning, Judge Barnes said she was given four weeks’ notice at the March 1 meeting in which she was told of the decision.

The judge also dismissed the employee’s claim on the ‘peremptory’ nature of her dismissal was also rejected, with the judge saying ‘it has not been established that what occurred went so far as to injure the [employee] in her employment or alter her employment position to her prejudice within s.342 of the Act’.

The employee also argued that the club failed to comply with the award’s clause 18 requirement to consult once a ‘definite decision’ on workplace change had been made, but Judge Barnes said it was not an obligation to discuss proposals, nor was it an obligation on individual directors to discuss their views, ‘no matter how firm’, with the employee.

The judge said the employee had not established that redundancy was a two-step process, with the decision to make workplace change via redundancy the first step, which activated the consultancy ahead of the second step, which was identifying the positions to be made redundant.

“Rather, the only definite decision in question was the decision to make the employee’s and one other position redundant,” she said.

“Thus the obligation was to consult about the way in which that definite decision was to be implemented.”

Such implementation occurred the day after the board meeting, constituting the ‘earliest practicably opportunity’.

Judge Barnes accepted her contention that the club breached the Fair Work notice requirements in calculating her four weeks’ notice period from the day it told her she was redundant (March 1), rather than the day she received written notification.

The club posted her termination letter the same day it dismissed her but she gave evidence she didn’t receive it until March 6.

Judge Barnes said s117 (1) not only prohibited termination without written notice but specified that ‘the day of termination cannot be before the day the notice is given’.

“On its face this provision envisages written communication being received by the employee no later than the day of termination itself,” she said.

Judge Barnes said the employee should be paid for the period between March 1 and 6 and gave the parties the opportunity to make submissions on an appropriate order for compensation for loss suffered because of the contravention and to agree on directions for a penalty on hearings.

She otherwise dismissed the application.

To read the full decision, click here.

Implications for AMMA Members

This decision does provide some comfort to employers in rejecting the notion of adverse action under the General Protection provisions of the Act. While the comments on the two-step process are welcome, the decision in some ways infringes on the process employers undertake.
Indeed, AMMA members must be diligent when considering redundancies, as the overall process has become more complex with the advent of the Fair Work Act 2009.

AMMA’s network of workforce consultants in each state can provide timely and considered advice, as well as template documents.