In a significant Fair Work Commission (FWC) decision reviewed by AMMA principal employee relations consultant Bill FitzGerald, it has been confirmed that the employer is in the best position to make assessments for reasonable employment, and that this does not mean labour hire employees must be disengaged to allow deployment of redundant employees.

Bill FitzGerald

Bill FitzGerald

The decision of Vice President Catanzariti (Brown and Ors v Clermont Coal Operations Pty Ltd T/A Clermont Open Cut [2015] FWC 3862 (1 September 2015) provides some useful guidance for AMMA members faced with a similar matter.

The facts

This matter came about following wholly-owned Glencore Xstrata subsidiary Clermont Coal’s dismissal of six production employees based at its Clermont coal mine, as part of a restructure involving more than 100 job cuts due to adverse market conditions.

The six employees claimed unfair dismissal on the grounds that it was not a genuine redundancy and that they could have been redeployed to similar jobs which were carried out by labour hire employees at that site or an alternative site operated by the employer.

S.389(2) of the Fair Work Act 2009 makes it mandatory that before a genuine redundancy can be established (which would negate any unfair dismissal remedy) the employer must demonstrate that  it would not have been reasonable in all the circumstances that the person be redeployed in the employer’s business or associated entity.

Clermont Coal argued that s.389(2) doesn’t require an evaluation of the reasonableness of displacing employees of contractors to create redeployment opportunities.

It further argued that the labour hire workers undertaking haulage and dispatch tasks were essential to provide its operations with specialised work and the flexibility to cover for absenteeism, particularly during periods of leave, and that the business model which included both direct employees and labour hire was in place to maximise efficiency.

The ruling

Vice President Catanzariti found in favour of the employer after a comprehensive assessment of the prevailing circumstances and previous cases where the Commission has considered whether it is reasonable to reduce labour hire to aid redeployment of surplus employees.

“…In general the Commission is not charged with the task of criticising the legitimate models of companies in exercising its discretion pursuant to s 389(2),” Vice President Catanzariti said.

“The appropriate consideration is whether in the particular circumstances of this matter, it was reasonable to displace the existing labour hire workers at the mine to make way for 29 Clermont Coal employees that were made redundant.

“The evidence before the Commission shows that the company had engaged some labour hire workers in the business to respond to changes in its labour requirements and also to perform specialised work.

“The operations of the mine are of a nature where each task is interdependent and part of as complex programme so that if one unit is unable to complete a task in the sequence the operational processes will be significantly affected.”

The Commission further found that it was not reasonable to require the employers to reduce numbers of existing labour hire to free up positions to redeploy the redundant employees.

“It would cause major operational difficulties for the respondent (Clermont Coal) if they were not able to have the flexibility to cover employees on leave in a work environment where symbiotic processes mean that the absence of personnel can bring production to a standstill,” he said.

“Requiring respondent to alter its business model in the circumstances where there was a legitimate operational strategy in place requiring a certain ratio of labour hire is not appropriate and cannot be characterised as a reasonable requirement to impose on the respondent.”

Implications for employers                                                                      

This is an encouraging decision that arguably limits the legislative redeployment requirement, but it is recommended that AMMA members seek advice on any issue relating to the redundancy process.

The onus is on the employer to demonstrate that it was not reasonable in all the circumstances to redeploy in the business or associated entity.

Members should retain evidence in the form of phone calls or emails to departments within the business or associated entities and then make an objective decision based on the responses and an objective assessment of skills and experience.

If it can be proved that the employer did not choose to redeploy employees where it was reasonable to do so, the Commission may find that it is not a genuine redundancy, which the opens up the prospect of a successful unfair dismissal action.

To discuss this case further, or for advice on a similar matter, contact Bill FitzGerald on (03) 6270 2256. Alternatively, contact a consultant at your local AMMA office.