By Alex Millman and Troy Wild, NRA Legal
Readers may recall our previous article in which we discussed the requirement on employers to consult with their employees when undertaking a business restructure (see article here).
In that article we identified that of the three matters that make up a ‘genuine redundancy’ under the Fair Work Act 2009 (FW Act), two of these – consultation and redeployment – are common areas where employers stumble and expose themselves to liability.
In this article, we will discuss the second of these most problematic obligations – redeployment.
Do I really have to try and redeploy someone?
Unlike the obligation to consult, which applies only to employees who are covered by a modern award or enterprise agreement, the obligation to consider options for redeployment is universal.
A redundancy will only be a ‘genuine redundancy’ if it was not possible, at the time of dismissal, for the employee to be redeployed in the employer’s enterprise.
Being couched in these terms, there is very technically in the words of the FW Act, no positive obligation to explore options for redeployment as at the time of dismissal.
However, various cases of the Full Bench of the Fair Work Commission determined that there is in fact an obligation on the employer to take steps to explore all options for redeployment[1].
This stems from the fact that where an employer raises defence that a dismissal was a case of a ‘genuine redundancy’, it is up to the employer to prove, on the balance of probabilities, that it was not reasonable in all of the circumstances to redeploy the redundant employee.
If the employer is not able to show evidence of their consideration of redeployment options, or worse can only provide evidence that they chose not to explore options for redeployment, then the Fair Work Commission would be highly unlikely to accept the defence.
How far do I have to look?
Much grief has been suffered by employers who, when considering options for redeployment, cast their net too narrowly.
The key element of the defence in this regard is that the employer needs to show that redeployment within both their own enterprise and the enterprise of any associated entity was not reasonable.
Associated entity takes its meaning from section 50AAA of the Corporations Act 2001, and includes most related bodies corporate.
This means that when considering options for redeployment, the employer must look to (in general terms):
- its holding company (if any);
- its subsidiaries (if any);
- its fellow subsidiaries (if any);
- any entity which controls the employer, or over which the employer has control;
- any entity which has a significant influence over the employer, of over which the employer has significant influence; or
- any entity which is controlled by the same entity as controls the employer.
This comes as a surprise to some employers, but it is not a new concept anymore. The Full Bench of Fair Work Australia (as it then was) addressed this in no uncertain terms in Ulan Coal Mines v Honeysett [2010] FWAFB 7578, stating that:
“… an employer cannot succeed in a submission that redeployment would not have been reasonable merely because it would have involved redeployment to an associated entity.”
Consequently, an employer which fails to consider redeployment options in associated entities will struggle to raise their defence before the Fair Work Commission.
So what is ‘reasonable’?
What is ‘reasonable’ redeployment when considering the defence of ‘genuine redundancy’ varies from case to case, as it takes into consideration a number of factors.
Primarily, the job in question must be suitable, having regard for the employee’s skills and ability to meet the requirements of the role, either immediately or with reasonable amounts of training.
Whether the employee would need to relocate for the role, the remuneration attached to the role, and whether the role is casual or permanent are also relevant factors.
It is very important to note that none of these factors overrules the others, and it is also important to never second-guess an employee’s response to any option.
In Jenny Craig Weight Loss Centres Pty Ltd v Margolina [2011] FWAFB 9137, the employer had failed to offer the employee a much more junior role at a significantly reduced rate of pay. The employee’s evidence was that for personal reasons, including a desire to spend more time with her family, she would have accepted that role at the lower rate of pay if it had been offered to her.
The Full Bench therefore dismissed the employer’s appeal that their defence should be upheld, noting that other than the employer’s second-guessing what level of pay the employee would accept, the employee had the skills and qualifications to do the role and was happy with the location of the role and therefore, redeployment was reasonable in all the circumstances.
Can’t they just do it themselves?
The short answer is ‘no’.
The obligation to redeploy an employee is designed to ensure some measure of job security. If an employer simply directs an employee to a list of current vacancies and tells the employee to compete with the open market, then the employer has not achieved this.
Further, if an employee facing redundancy applies for a position, and is not successful, then unless the employee was patently unsuitable for the position it is open to be argued that the employee could have been redeployed in that position.
It is no defence for an employer to say that an external applicant was simply the better applicant for a vacant position. Whilst the Fair Work Commission will accept an argument that the redundant employee was not suitable for the position, it will not accept an argument that the redundant employee was merely less suitable than an external employee.
The only time a competitive process such as this is suitable is where there are simply more redundant employees than vacancies. In this circumstance, the redundant employees may validly compete amongst themselves until all vacancies are filled (unless the employees are patently unsuitable for the role/s).
It is this requirement which gives rise to policies, particularly in larger companies, to not advertise vacancies on the open market whilst redeployment is under consideration, or to give preferential treatment to applicants who are facing redundancy. The message “We have decided to recruit internally”, whilst frustrating to many a job-seeker, can sometimes be read to mean “we redeployed someone who was facing redundancy.”
All too confusing?
Redundancy can be a minefield; to find out how the lawyers at NRA Legal can help, call 1800 RETAIL (738 245).
[1] See, for example, Skinner & Ors v Asciano Services Pty Ltd t/a Pacific National Bulk [2017] FWCFB 574