In a recent decision allowing a dismissed employee’s appeal, the Full Bench of the Fair Work Commission (FWC) has emphasised the importance of employers complying with consultation clauses in Modern Awards in order to effect genuine redundancies.
In Manescu v Baker Hughes Australia Pty Ltd  FWCFB 403 (delivered 13 April 2018), an employer was found not to have met its consultation obligations under the Professional Employees Award to effect a “genuine redundancy” under the Fair Work Act 2009 (the Act) as it did not give “serious” consideration to an employee’s proposal of redeployment
Mr Manescu, an employee of Baker Hughes Australia Pty Ltd (‘Baker’), was dismissed due to redundancy caused by operational changes in the business. Mr Manescu brought an unfair dismissal claim under the Act. Baker argued it was a genuine redundancy within the meaning of section 389 of the Act and therefore Mr Manescu could not seek a remedy for unfair dismissal.
The Full Bench of the FWC remitted the decision to a single member of the FWC for rehearing.
The FWC of the Full Bench noted that:
- An employer must notify employees of a definite decision to introduce major changes that are likely to have a significant effect on the employees, including termination;
- An employer has an obligation to discuss with their employees the introduction of the change, the effect the change will likely have on employees, measures to avert or mitigate the adverse effects of such change, and give prompt consideration to matters raised by employees in relation to the change; and
- Once an employer makes a definite decision to make the change, discussions must commence as early as practicable and all relevant information should be provided in writing.
The FWC found that no written information was given to Mr Manescu for the purpose of undertaking an informed consultation in which discussions could take place about measures to avert or mitigate the adverse effects of the operational changes.
The FWC found that if a proper consultation was undertaken as required by the Modern Award, then there would have been a real possibility of identifying alternate employment opportunities. Further, the three hours of consideration Baker gave to a proposal of Mr Manescu amounted to a failure to give it serious consideration.
Under the Act, a person’s dismissal will not be considered a genuine redundancy it if would have been reasonable in all of the circumstances for the person to be redeployed within the employer’s enterprise or the enterprise of an associated entity of the employer.
Mr Manescu brought to the attention of Baker a redeployment opportunity which Baker did not consider existed, and therefore gave no weight to this redeployment opportunity in the consultation. Deputy
President Bull at first instance relied on Baker’s assertion that the redeployment opportunity did not exist resulting in this matter not being considered.
The FWC found that this redeployment opportunity did exist and Baker unintentionally mislead Deputy President Bull at first instance to not consider relevant matters relating to redeployment positions available to Mr Manescu.
Modern Awards Consultation Clause
To avoid giving an employee rights to make an unfair dismissal claim an employer must comply with the consultation process outlined by the applicable Modern Award or Enterprise Agreement.
Every Modern Award contains a standard consultation clause.
What To Do
Employers should take the following steps to ensure compliance with consultation obligations under Modern Awards so as to establish a genuine redundancy:
- Consider carefully whether an employee is covered under a Modern Award or not. The Professional Employees Award, considered here, is a good example of an Award that can fly ‘under the radar’ – as employees who will be technically covered by the Award may be paid salaries well in excess of the Award’s minimum amounts. The fact that an employee can be paid salaries in excess of $150,000 and still be Award covered can be overlooked.
- Certainly if covered by an Award, and otherwise for the sake of good practice, provide employees in writing with all information about major changes that are likely to have a significant impact on them to ensure that a properly informed discussion can take place.
- During discussions, the following topics should be covered:
- The introduction of the change;
- The effect the change will likely have on employees; and
- Measures to avert or mitigate the adverse effects of such change such as redeployment.
- Prompt consideration should be given to matters raised by employees in relation to the change and redeployment.
- Keep clear records of the consultation process and its outcome.
This Alert is intended as an alert only. It does not purport to be comprehensive advice. Readers should seek professional advice before acting in relation to these matters.