In times of major organisational change which result in restructure and redundancies, employers may overlook obligations they may have to provide notice and consult with employees under industrial instruments.
In the decision of Frederick Deon Du Preez v MSWA Limited [2024] FWC 1793, the Fair Work Commission (FWC) dismissed an employer’s jurisdictional objection after determining that the dismissal was not a genuine redundancy due to non-compliance with the consultation obligations under the enterprise agreement. The FWC went further to say that the failure to consult with the employee also rendered the dismissal unfair.
Section 389(1) of the Fair Work Act 2009 (Cth) (FW Act) states that a genuine redundancy exists where an employer no longer requires an employee’s job to be performed due to changes in operational requirements and that the employer has complied with the consultation obligations for redundancy in the applicable modern award or enterprise agreement.
The employee was initially engaged by MSWA Limited (MSWA) as a Finance Data Analyst in June 2022 and was dismissed by way of redundancy in November 2023 following structural changes that were made by the company’s newly appointed Chief Information Officer (the CIO).
MSWA lodged a jurisdictional objection to the employee’s unfair dismissal application on the basis that the employee was made genuinely redundant.
Clause 11 of MSWA’s collective Enterprise Agreement (MSWA’s Agreement) stated that “where MSWA has decided to take action that will significantly affect an employee or make an employee redundant, the employee is entitled to be informed as soon as reasonably possible”. Further, Clause 16 of MSWA’s Agreement requires MSWA to discuss the introduction of major changes, expressly including redundancies, the effects that the change is likely to have and any measures to mitigate adverse effects on the employee in circumstances where MSWA has made a “definite decision to introduce major changes”.
In October 2023 the CIO emailed senior MSWA employees summarising the structural changes that would be made, including that the Finance Data Analyst role would be redundant under the new structure because the position was “too narrow in scope and skills set”. The CIO’s email included a schedule for the roll out the changes, such as meeting with impacted staff, advertising for new roles and the interview process.
MSWA submitted that it had complied with its obligations to consult with the employee – having informed the employee of its decision to make his role redundant in October 2023 and then its two meetings with the employee in November 2023 prior to the termination of employment due to redundancy.
The FWC disagreed, finding that the MSWA had made the decision to undertake a review and restructure of the employee’s team in June 2023. The FWC found that it was at this point that the consultation obligation was triggered.
The FWC was not satisfied that MSWA had complied with their consultation obligations. The CIO did not go to the effort of speaking with the employee before making the decision, only consulting senior MSWA employees about what the employee’s skills and role were. The FWC stated “Consultation is not merely telling an employee that they have been made redundant several months after a decision has been made to restructure their team”.
Although the FWC found that MSWA’s operational changes were genuine and it would have been unreasonable to redeploy the employee, MSWA’s failure to comply with their consultation obligations meant the dismissal was not a case of genuine redundancy and therefore the employee was protected from unfair dismissal.
Turning then to whether the dismissal was harsh, unjust or unreasonable, while a failure to consult does not automatically lead to a conclusion that the dismissal was unfair, the FWC gave considerable weight to MSWA’s non-compliance with their consultation obligations and that the employee was not given an opportunity to mitigate the effect of the decision. It found that it was unreasonable for MSWA to wait four months before consulting the employee. This rendered the dismissal unfair.
The FWC ordered the MSWA to pay to the employee $7,542 plus superannuation in compensation.
The FW Act is clear that a dismissal is not a genuine redundancy unless the employer has complied with their consultation obligations found in the applicable modern award or enterprise agreement.
What is significant in this matter is that the obligation to consult arose when the employer made the decision to review and restructure its operations and not months later when the decision is made to implement the restructure.
Failure to comply with consultation obligations will mean that the jurisdictional objection cannot be relied upon, exposing employers to unfair dismissal claims and findings that the dismissal was unfair.
Information provided in this blog is not legal advice and should not be relied upon as such. Workplace Law does not accept liability for any loss or damage arising from reliance on the content of this blog, or from links on this website to any external website. Where applicable, liability is limited by a scheme approved under Professional Standards Legislation.
