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Difficult barriers to redeployment will not 'inoculate’ employers against unfair dismissal

Libby Pallot, Ben Tallboys,Anthony Massaro, Mandi Xu, Abbey Burns, Kelly Ralph, Ashleigh Warren, Morgan Smithe, Shi Jing Wong, Harrison Gray, Emily Tang, Molly Lawlor, Jack Kneale & Sarah Newman

On Friday 5 April 2024, the Full Federal Court of Australia made it clear in an appeal from the Fair Work Commission, that an employer’s reliance on external labour, such as contractors, will be a relevant consideration, when determining if an employee’s redundancy is ‘genuine’.

The “immediate unavailability of a position to which a redundant employee could conveniently have been redeployed does not necessarily inoculate an employer against a charge that a dismissal was not a case of genuine redundancy” the Court held.

Unfair Dismissal and Genuine Redundancy

For an employee to successfully claim they have been unfairly dismissed, they must be able to demonstrate, amongst other things, that their dismissal was not a case of ‘genuine redundancy’.

While an employee bears the onus of satisfying the Commission their dismissal was unfair, the onus is on the employer to demonstrate that the dismissal was a case of ‘genuine redundancy’. An employee’s dismissal will not be a ‘genuine redundancy’ if it is established that it would have been reasonable in all the circumstances for them to be redeployed within the employer’s enterprise or an associated entity of the employer’s enterprise.

Background

On 1 August 2018, Helensburgh Coal Pty Ltd engaged Nexus Mining Pty Ltd to provide various services at Helensburgh Mine for a two-year period. In early 2019, Helensburgh also engaged another company Menster Pty Ltd to service, inspect, audit, and rectify the mine’s underground conveyor systems.

In response to the Covid-19 pandemic, in 2020, Helensburgh reduced the operations of the Helensburgh Mine to a four-crew, six-day per week model, replacing the five-crew, seven-day-per-week operation in place at the time.

During consultations, representatives of Helensburgh employees requested the employer reduce their reliance on contractors such as Nexus and Menster, as it was suggested this work could be performed by existing employees.

Twenty-two employees of Helensburgh were dismissed in June 2020 due to redundancy.

The employees challenged their dismissal in the Commission, maintaining they were unfairly dismissed. While Helensburgh stated each dismissal was a case of genuine redundancy, the employees argued that it would have been reasonable for Helensburgh to redeploy them to other roles, specifically roles that were being performed by contractors at Helensburgh Mine.

The Appeal

Before the matter reached the Federal Court, there were four decisions of the Commission which ultimately concluded that none of the dismissals of the employees were cases of ‘genuine redundancy’. Helensburgh appealed the fourth decision of the Full Bench of the Commission to the Federal Court.

The Federal Court acknowledged that the Fair Work Act 2009 (Cth) provides a general “immunity” for employer’s who are required to dismiss employees for operational reasons. However, this general immunity is not absolute, and is qualified by redeployment being reasonable in all of the circumstances.

The term “redeployed” refers to reassigning an employee, whose role is redundant because the position they were performing is no longer required to be done by anyone, to undertake another role with other tasks (assuming the employee has the requisite skills and experience, or could be reasonably trained to do that new role).

The Federal Court found that the possibility of redeployment is to be assessed according to what would have been reasonable for the employer to do, which requires an analysis of measures the employer could have taken to redeploy the redundant employee. As the Act requires consideration of redeployment in all of the circumstances, the possibility that an employer might reduce their reliance on contractors, is a ‘circumstance’ that informs whether redeployment would have been reasonable.

The Federal Court held that “[t]he fact that there might be some barrier that makes redeployment more difficult or more involved than it otherwise could be—whether that barrier takes the form of a need for retraining or, as here, the pre existing occupation of roles by contractors—is not to the point. Whether redeployment “would have been reasonable in all [of] the circumstances” requires analysis of what an employer could have done apart from dismissing the employee”.

The Federal Court concluded that the Full Bench did not fall into error by determining that, in light of contract services performed by Nexus and Menster, Helensburgh could have taken steps that would have enabled redeployments of the employees into these roles. As such, the Federal Court dismissed the appeal.

Appeal to the High Court

However, it has been reported that Helensburgh has made an application to the High Court of Australia to appeal the Federal Court’s decision, arguing that it misinterpreted the process of considering whether a redundancy is a ‘genuine redundancy’. Helensburgh is apparently arguing that the Federal Court should have considered its existing state of affairs at the date of the dismissal, but has mistakenly considered what state of affairs could have existed at the date of dismissal if Helensburgh had made different decisions in response to its changing operational requirements.

Key takeaway for employers

The Federal Court’s current backing of the Commission serves as notice to employers that redeployment must be considered thoroughly taking ‘all of the circumstances’ into consideration whether that is reducing the contractor pool, retraining staff who may otherwise not have the skills or experience for a role, or other matters. It is not going to be sufficient for employers to take the easy path at the cost of maintaining employment. However, this may change if an appeal to the High Court proceeds and is successful.

How can we help?

If you need any advice on this issue, contact a member from our Workplace Relations, Employment and Safety team.

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