Redundant employees reinstated

Introduction

Recently the Fair Work Commission (the Commission) found that employees dismissed for redundancy were unfairly dismissed because the employer failed to:

• meet the consultations obligations that operate under the applicable enterprise agreement; and
• consider reasonable redeployment opportunities.

Further, as redeployment opportunities were available, the Commission ordered their reinstatement with back pay.

Facts

Staples Australia Pty Ltd (Staples) dismissed 12 permanent warehouse employees from its Erksine Park site for redundancy.  The warehouse was performing overbudget for several years and labour accounted for 60% of the costs. 

Staples made its decision to reduce the number of permanent warehouse staff on 5 July 2016.   The decision was announced on 11 July 2016 at the Joint Consultant Committee (the JCC) which is provided for in the enterprise agreement.  Subsequently, the employer met with the permanent warehouse staff and after that had one on one meetings. The employees were provided with a letter confirming the implementation of redundancies. The letter advised that employees would be assessed against a selection matrix and that a decision on their employment would be made by 13 July 2016.  The 12 employees selected for redundancy were advised on 13 July 2016 and provided a list of vacancies available in the business.  Three employees who did not want to pursue redeployment were dismissed on 14 July 2016 and the remaining employees were dismissed on 20 July 2016.  Four of the employees brought unfair dismissal claims. 

Findings

Consultation

The Commission found that three clauses in the enterprise agreement imposed consultation obligations on the employer when considering redundancy and they had not been applied by Staples.  The first clause replicated the legislated model consultation clause.  The second required consultation with respect to changes to regular rosters or ordinary hours of work and the third required Staples to involve the JCC in the decision making for all major changes at its Erskine Park site. 

The Commission found that the consultation that had been engaged in was “unduly hasty and largely tokenistic.  Staples management did not engage in genuine or meaningful consultation with its employees and their representatives, but instead it made disingenuous gestures which it sought to portray as consultation.” The selection for redundancy occurred within one day of the announcement.  This process did not provide “any reasonable and objective contemplation, provide for the discussion and provision of relevant information as contemplated by” the enterprise agreement.  The Commission also found contrary to the consultation clauses that “Staples did not invite employees to give their views about the impact of the change (including any impact in relation to their family or caring responsibilities) and to consider any views given by the employees about the change”, nor did it involve the JCC in the decision-making process. 

The Commission ultimately found that Staples’s consultation was “so significantly non-compliant as to be grossly deficient”

Redeployment

On the issue of redeployment, the Commission found that:

• redeployment opportunities in other business units in Erskine Park were not considered in particular the Transport and Facilities team which was performing well; and
• the employees that had been made redundant in July 2016 could have formed part of the 20 additional permeant warehouse employees Staples was required to add to its workforce by 31 December 2016, in accordance with a commitment given in the enterprise agreement. 

Dismissals Unfair

Having found that Staples failed to consult and failed to consider reasonable redeployment opportunities, the Commission determined that the dismissals were unfair.

Remedy

Although the Commission accepted Staples’ resistance to reinstatement and that other employees may consequentially have to be made redundant, it determined that reinstatement with back pay was appropriate due to the significant defects in the failure to consult, reasonable redeployment opportunities existed where 19 new employees had subsequently been hired, the employment relationship had not deteriorated, the work records of all but one employee were unblemished, and the inference that prior workplace injuries and roles as workplace representatives were included in the selection process - which is unlawful

Lesson for employers

The facts of this case are somewhat unusual. However, the case highlights the risk to employers if they only pay lip service to their consultation and redeployment obligations. It is necessary for employers to ensure that they do not include unlawful factors when developing matrices for selecting employees for redundancy and they consider redeployment opportunities beyond just the immediate business unit and factor in workforce numbers in the near future.

If you would like to know more about this case or obligations on redundancy, please contact National Workplace Lawyers on (02) 9233 3989.

National Workplace Lawyers

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