No genuine redundancy where there was opportunity for redeployment with a related entity’s Indian operations despite being overseas and with lower remuneration

Introduction

In a recent decision, the Fair Work Commission found an employer was unable to rely upon the “genuine redundancy” defence to an unfair dismissal claim brought by a former full-time Software Engineer.

Section 389 of the Fair Work Act 2009 (Cth) (FW Act) sets out the meaning of “genuine redundancy”. All of the relevant elements in that section need to be satisfied for the employer to be able to rely upon the defence. In this case the employer failed to satisfy the consultation obligation and the redeployment obligation so the “genuine redundancy” defence to an unfair dismissal claim was not available to the employer.   

Job no longer required

The Commission found the termination did satisfy s. 389(1)(a) of the FW Act, being that the employer no longer required the employee’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise. The Commission found that the employer’s “financial predicament resulted in a change in its operational requirements (by way of headcount in Australia) in order to reduce costs”. This occurred on 8 December 2022 when the employer decided that four positions in the employer’s Australian operations were to be made redundant, including the employee’s position as a Software Engineer.

Consultation obligations

However, the employer did not fulfil its consultation obligations under the applicable modern award as required by s. 389(1)(b) of the FW Act. The Commissioner’s reasoning on this point noted that the employer’s “consultation was at best a perfunctory exercise”. 

Redeployment obligations

This case is helpful for its discussion of the redeployment obligation in s. 389(2) of the FW Act. During the restructure, the employer continued to recruit for a number of positions at its Indian operations, which were conducted by a related entity. The Commission found the work performed by the employee would have enabled her to perform at least one of the roles in the Indian operation.

The Company’s General Manager did not offer the Indian-based role to the employee as he did not believe the employee would have accepted it because it was in India and had a lower remuneration level compared to the Australian role.

However, the Commission explained had the Company consulted with the employee “it may have been advised that she was keen to work in different cultures, prepared to travel and, despite the lower wages, would have liked to experience the role for 2-3 months.”

The Commission further stated, “It is dangerous for Employers with redeployment options to fetter offers based on their own prejudices.”

The Company did not meet the requirements in s. 389(2) of the FW Act as the Company had a role available with an associated entity into which it would have been reasonable in all the circumstances for the employee to be redeployed.

Key take-aways

When considering redeployment opportunities for an employee in the context of a redundancy, employers need to explore opportunities within related entities, even if they are based overseas, as well as opportunities involving lower or higher paid jobs.

If you would like more information about the case, please contact our office on +61 2 9233 3989.

Alesia Khliustova v Isoton Pty Ltd [2023] FWC 658 (28 April 2023)

National Workplace Lawyers

Note — this is for information purposes only and does not purport to be comprehensive or to render legal advice.