Is it a “genuine” redundancy or not?

Background

In the case of Muhammad Buttar v PFD Food Services Pty Ltd T/A PFD Food Services [2017] FWC 4918, the Fair Work Commission (FWC) found that an employee’s dismissal was not a “genuine” redundancy despite undertaking a legitimate restructure of its business.

Mr Buttar was an employee of PFD Food Services (PFD) with more than two years’ service and was employed as a Supervisor within the Adelaide Fishroom. His employment was governed by the relevant modern award, the Seafood Processing Award 2010 (Award).

The Adelaide Fishroom had been experiencing a serious downturn in business and as a result, PFD decided to restructure and sought to reduce labour costs by making Mr Buttar’s position redundant.

Absent any consultation or discussion with Mr Buttar, PFD sought to make Mr Buttar’s position redundant on the same day they notified him that it would take effect, despite its obligation under the Award to consult with employees affected by major workplace change.

Mr Buttar brought an application for unfair dismissal against PFD. The decision before the FWC was to determine whether the redundancy was a “genuine” redundancy as defined under the Fair Work Act, and if not, whether the dismissal was “harsh, unjust or unreasonable”.

FWC Decision

Deputy President (DP) Anderson of the FWC found that PFD unfairly dismissed Mr Buttar and was ordered to reinstate him into his former role as supervisor (or an equivalent position) despite the presence of the following facts:

• PFD had a genuine business reason to restructure, due to the downturn in performance and profitability suffered by the Adelaide Fishroom.
• A meeting was held between Mr Buttar and Mr DeCasto, PFD’s State manager, however it was held that this did not discharge PFD’s consultation obligations as it did not constitute meaningful consultation.

PFD’s failure to consult with Mr Buttar in accordance with its statutory obligation under the Award meant that the redundancy could not be a genuine redundancy within the meaning of the FW Act. It was held that Mr Buttar had been unfairly dismissed because PFD failed to give “reasonable consideration” to redeployment when notifying Mr Buttar of his redundancy on the day it took effect. DP Anderson found that Mr Buttar’s dismissal could not be considered to be a genuine redundancy as it would have been reasonable in all the circumstances for Mr Buttar to be redeployed by PFD, either within its business or an associated entity.

Considerations by FWC

When determining whether reinstatement of Mr Buttar would be appropriate, DP Anderson considered the following matters:

• PFD would incur ongoing labour costs it otherwise sought to eliminate; and
• PFD’s claim that the relationship between Mr Buttar and the State manager was severely damaged and had broken down.

Despite the presence of these factors by PFD, DP Anderson determined that the relationship between Mr Buttar and Mr DeCasto was capable of being both managed and salvaged, and therefore reinstatement was appropriate.

DP Anderson determined “that difficulty does not outweigh the factors which weigh in favour of a finding that reinstatement is not inappropriate” and identified relevant factors in favour of reinstatement including:

• Mr Buttar’s strong employment record; and
• the fact that Mr Buttar had developed friendly relations with colleagues with who he worked with on a daily basis.

FWC determined that an order for reinstatement to another position, consistent with Mr Buttar’s skills and capability, on terms and conditions no less favourable than those immediately before his dismissal, was appropriate.

Lessons learned

As this case demonstrates, failure by PFD to adequately undertake consultation and provide consideration of any possible redeployment opportunities led to the decision of the FWC to reinstate Mr Buttar into his former position, despite the fact that PFD asserted that the relationship with Mr Buttar had broken down due to a loss of trust and confidence.

The PFD decision is useful in assisting employers to understand the level of engagement that the FWC requires from employers in order to demonstrate compliance with obligations under relevant industrial instruments.

In order to assist employers in understanding how to undertake in meaningful consultation with employees affected by major workplace change (which includes redundancy), employers of award-covered employees should ensure they do the following before terminating an employee’s employment due to redundancy:

• meet with affected employee/s to discuss the nature of the change and the effect on the employee/s;
• ensure the employee/s are afforded an opportunity to provide any suggestions and/or issues about the effect the proposed change may have on them during the consultation meeting and any subsequent meetings;
• discuss any redeployment opportunities and consider the employee’s skill set, qualifications and experience to determine whether there may be suitable alternate roles available within the business or any of its associated entities;
• issue written correspondence to affected employees to provide an overview of the discussions had;
• ensure any matters raised by employees in relation to the change are acknowledged, considered and addressed.

 

This overview is to be used only as a guide to matters that should be addressed during the course of fulfilling statutory obligations to consult with employees affected by major workplace change. It is recommended that specialist advice be sought to ensure strict compliance with these statutory obligations.

 

This article was written by Amanda Dorahy, Associate at Workdynamic Australia. The information in this article is for information purposes only and does not constitute legal advice. You should obtain specific advice relevant to your circumstances.