A Full Bench of the Fair Work Commission has quashed an earlier single member ruling that accepted an employer’s decision to choose redundancy over redeployment.

The case provides a warning to employers to ensure they comply with their obligations under the Fair Work Act to properly explore redeployment options before pursuing redundancies.

 Background

In May 2016, Commissioner Leigh Johns of the Fair Work Commission heard a dispute between national rail operator Asciano Services (trading as ‘Pacific National Bulk’) and nine employees, seven of whom later filed for unfair dismissal remedies arguing their redundancies were not genuine.

The employees, all locomotive operators, were represented by Barrister Simon Meehan and argued they were made redundant without the company properly considering ‘job swaps’, contrary to its obligations for redeployment under the Fair Work Act.

In the decision at first instance, Commissioner Johns ruled in favour of the employer and rejected the unfair dismissal application based on his findings that the redundancies were genuine due to commercial circumstances and it would not have been reasonable for the employer to redeploy them all.

Grounds of appeal

The employees appealed the decision on the grounds that the Commissioner had erred in finding their case was one of genuine redundancy and in his finding that it was not reasonable for the employer to arrange for ‘job swaps’ at other sites.

Further, they argued that Commissioner Johns did not properly consider evidence that showed the employer targeted specific employees for redundancy based on perceived ‘shortcomings’, such as one employee who was illiterate and another who could not use a computer.

Despite Johns’ finding to the contrary, they argued on appeal that it was not reasonable for the employer to investigate individual ability, performance or conduct.

Further grounds of appeal included that Pacific National advertised jobs at other New South Wales depots shortly after making the applicants redundant.

Bench finds employer breached obligations

 After considering all facts, the Full Bench comprising Senior Deputy President Drake, Deputy President Asbury and Commissioner Saunders – overturned Cmr Johns’ decision and found the company breached its statutory obligation to explore redeployment options.

“The failure to redeploy the appellants occurred in circumstances where the employer had indicated a willingness, at the outset of the redundancy process, to adopt a course involving swaps – it was not only reasonable because it made sense, but also because the employer had expressly embraced it,” the Full Bench said.

The Full Bench continued that while an employer who did not implement such a swap or offer voluntary redundancies did not automatically fail to meet the requirements to contemplate redeployment under s389(2), but the employer must weigh up some issues for the redundancies to be considered genuine.

It canvassed the authorities in Ulan Coal Mines Ltd v Honeysett and Ors and Gilbert & Ors v Asciano and concluded it would have been reasonable in all of the circumstances for Asciano Services Pty Ltd t/a Pacific National Bulk to follow that course of exploring redeployment.

Importantly – the Bench considered the ‘context’ in which the employer could have considered redeployment options.

It said the employer was a large business employing train drivers in similar roles with similar duties to those made redundant and that a ‘swap’ would not impose ‘onerous training requirements’ on the workers.

It added that some potential swaps were available close to where the redundant employees were based and the company would not have been ‘exposed’ to the costs associated with transferring employees.

Pacific National had previously allowed swaps in similar circumstances and should have in this instance, the Bench said. In not doing so, and removing that option from consideration altogether, this resulted in it failing to comply with its obligations under s.389(2) of the Act, the bench found.

“We are not satisfied that [Pacific National] did all that it was required to do in determining whether it would have been reasonable in all the circumstances to redeploy a person whose position is redundant, by allowing that person to swap with another employee who wished to accept redundancy,” it said.

“We are therefore not satisfied that the dismissal of the appellants was a case of genuine redundancy.”

The appeal was allowed and the original decision overturned. The bench referred the matter back to Commissioner Johns for rehearing.

Click here for the full decision.

Implications for employers

It is critically important to ensure any redundancies are made in accordance with your obligations under the Fair Work Act which includes properly considering options for redeployment, especially in cases like Pacific National where the size and type of work makes it clear that ‘job swaps’ could be reasonably arranged.

If such obligations are not taken seriously, employers risk proceedings for unfair dismissal as was the case here.

Further lessons from this case include that a redundancy may be deemed ‘not genuine’ if there is evidence certain employees were chosen for redundancy over others due to personal traits that previously had not been identified as job-critical and/or subject to performance management.

For advice on workplace restructuring, including correct procedures and considerations for redundancies, contact an AMMA consultant near you.