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Employment Law - Unfair Dismissal or a Genuine Redundancy? When is Redeployment Reasonable?

Date: November 29, 2011

Authors: Patrick Mulligan B.A., LL.B.

A common issue in termination of employment is determining whether the employee has been unfairly dismissed or made redundant. The employer may have told the employee that it is a genuine redundancy. The employee may also have received a redundancy package. On the face of it, this means that the employee does not have jurisdiction to make an unfair dismissal claim pursuant to s385(d) of the Fair Work Act 2009(Hereafter FWA). The relevant test for whether a redundancy is genuine is set out in s389. In particular s389(2) outlines when redeployment would be reasonable and the dismissal is not a genuine redundancy.

The purpose of this article is to review two recent decisions in FWA concerning whether a redundancy is genuine pursuant to s389 or in substance an unfair dismissal. The cases are Ulan Coal Mines Ltd v Ulan Coals v Honeysett [2010]FWAFB 7578 and Wilson v North Rockhampton Bowls Club Inc [2011] FWA 1928. These two cases considered whether a redundancy was genuine at the time of dismissal where other vacancies were advertised by the employer.

1. Is it a genuine redundancy under s389(2) FWA?

1.1 Honeysett Case.

In the Honeysett case Ulan Mines had Ltd had made several miners redundant. The mine is set 50 kilometres north of Mudgee. Ulan Mines is part of Xstrata Coal Pty Ltd (Xstrata). Xstrata operated other coal mines in New South Wales. The closest mine from Ulan was over 100kms away. At the time that the Ulan miners were retrenched, jobs were advertised at other Xstrata mines. The retrenched miners were offered to apply for other advertised vacancies at the Xstrata mine. It was argued by the Union that despite this, the retrenchments were not genuine redundancies as other vacancies were available as provided for in s389(2) FWA. Ulan maintained that the retrenchments were genuine and that unfair dismissal claims were therefore not available.

The full bench considered the meaning of 389(2) on appeal. They stated the following relevant considerations:

  • Genuine Redundancy is a defence to unfair dismissal claims. The purpose of s389(2) is to ensure that this defence is not available where redeployment of an employee would have been reasonable;
  • Redeployment applies to other related entities however the degree of managerial control will be a relevant consideration;
  • In deciding whether the redeployment would have been reasonable relevant considerations include:
    • The nature of any available position;
    • The qualifications required to perform the job;
    • The employees skills, qualifications and experience and any need for retraining;
    • The location of the job in relation to the employees residence; and
    • The Remuneration which is offered;
  • The tribunal found in favour of the employees and also reasoned that where an employer made employees apply for advertised positions and compete with other applicants, it might be subsequently found that the resulting dismissal is not a case of a genuine redundancy.
1.2 Wilson’s Case.

The Wilson Case applied the Honeysett principles. In that case the applicant applied for unfair dismissal and argued that her termination was not a case of genuine redundancy. There were some disputes with regards to the facts. However, the agreed facts were that the club held an emergency general meeting. By a majority vote they decided to merge the position of manager and secretary and advertise a position. At the time the applicant was employed as a manager for over 4 years. She was made redundant and encouraged to reapply for the new advertised position.

The employer argued that the redundancy was a result of restructuring pursuant to s389(1)(a) and was therefore a genuine redundancy. They further argued that the advertised role was sufficiently broader than the existing manager role. Further the tribunal gave some probative weight to the argument that the new secretary manager role was the subject of a general meeting and vote. The Tribunal found that the new role was sufficiently broader and was therefore reasonable in all the circumstances. Accordingly, the employee’s application for unfair dismissal failed on grounds of genuine redundancy.

2.0 Observations of Honeysett and Wilson.

2.1 For Employers.

In the event that you are an employer, you need to consider whether or not it is possible or reasonable to redeploy an employee to another area in accordance with the principles set out in Honeysett. Wilson’s case shows that careful consideration should be given to new roles that are advertised when making employees redundant. If they are substantially broader then they may be ok. If not you should seek legal advice. There are other ways to protect yourself from future claims.

2.2 For Employees.

Many employees are concerned about future job prospects. This is particularly relevant to older employees. If you are offered a redundancy package you should seek legal advice. The Honeysett principles may apply. It may not be a reasonable redundancy if they can redeploy you elsewhere. Accordingly, you may argue it is not a genuine redundancy and lodge an unfair dismissal claim where one of the remedies is reinstatement. Alternatively, you may want to seek legal advice to ensure that the redundancy package is reasonable. It may be the case that you accept the package and bargain for more than your statutory entitlements to take into account potential damages for unfair dismissal.

Disclaimer.

This article cannot be relied on as legal advice. In the event that you need legal advice on employment law issues please contact LAC Lawyers for an interview.

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