2017 saw a number of interesting redundancy decisions in the resources sector.
One decision deals with the setting of safety net redundancy entitlements in modern awards.
The other three discuss particular redundancy situations in the usual context of unfair dismissal applications. They illustrate the difficulty employers face in knowing precisely what is required of them when alternative courses such as job swaps, salary reductions and redeployment are available.
Redundancy and the modern award objective
In CFMEU v Anglo American Metallurgical Coal Pty Ltd [2017] FCAFC 123, a Full Court of the Federal Court upheld the Fair Work Commission’s decision to vary the Black Coal Mining Industry Award 2010 by capping redundancy payments. The cap applied a maximum of two weeks’ pay in respect of “severance pay” for each year of employment, up to a maximum of 15 years, with one week’s pay in respect of “retrenchment” for each year of employment remaining uncapped. The variation replaced an earlier age-based limitation on severance pay that was linked to a retirement age of 60. This cap had been removed in an earlier decision of the FWC on the basis that it was unlawfully discriminatory.
The CFMEU, APESMA and the AMWU brought the application in the Court against the FWC’s decision to introduce a service based cap, and argued that the FWC had failed to consider whether a cap was necessary to achieve the modern awards objective. The unions also argued that the bench took into account an irrelevant consideration about the earlier abolition of the 60 years of age redundancy cap.
The Full Court rejected all of the unions’ arguments. It held that the FWC’s statutory task was not to consider whether the unamended clause met the modern awards objective, but to consider whether the amended clause met the objective. See also Four yearly review of Black Coal Mining Industry Award 2010.
Redundancy and job swaps
In Skinner v Asciano Services Pty Ltd [2017] FWCFB 574, a Full Bench of the FWC allowed an appeal against a decision dismissing seven employees’ unfair dismissal applications. The employees argued that their employer failed to comply with its redeployment obligations under the Fair Work Act 2009 (Cth) by not considering a voluntary job swap.
The employer had advised the train driver employees of vacant positions and opportunities to transfer to other sites, and invited each employee to express interest in other roles. The employer maintained that the employees either showed no interest in the available positions, were unsuccessful in applying for them, or declined offers of redeployment.
At first instance, the FWC was satisfied that there was a genuine redundancy in each case, and that the employer had fulfilled its redeployment obligations. On appeal, a Full Bench determined that the employer should have considered voluntary job swaps and that, by failing to do so, it had not met the requirements in s 389(2) of the FW Act.
The Full Bench recognised that there is no general obligation for an employer to implement a process by which redundant employees can swap with other employees who wish to volunteer for redundancy. However, it also noted that the employer had previously allowed job swaps in similar circumstances, and had even suggested job swaps as an option to mitigate the effect of the redundancies. It also considered that due to the proximity of the job swap opportunities at nearby depots, the costs of transferring employees would not be significant, and that a number of employees were performing the same or substantially the same role meaning that allowing a swap would not place onerous training requirements on the employer.
This case indicates that prior conduct of an employer and expectations arising from that conduct can be relevant in assessing what approaches might reasonably be expected in relation to redeployment and job swaps.
Redundancy and salary reductions
In Mallard v Parabellum International Pty Ltd [2017] FWC 2531, the FWC found there was no genuine redundancy and so dismissed an employer’s jurisdictional argument against claims of unfair dismissal.
Four employees claimed that they had been unfairly dismissed by their employer, a company providing emergency response services on a major natural gas project in Western Australia. Each applicant was employed in the position of an Emergency Services Officer.
As a result of a client reducing its contract prices, the employer decided to reduce the salaries of its workforce. Each of the four employees was offered a salary reduction of around 13%, the offer being refused in each case. Each employee was dismissed.
In response to the unfair dismissal claims, the employer argued that the employees were genuinely redundant. The argument rested on a wide view that the term “job” in the FW Act must be read to include the remuneration of the particular job.
The FWC confirmed that a job is made up of its functions, duties and responsibilities, and the remuneration is the value placed on performing that job by the employer. A job was redundant when the functions, duties and responsibilities formally attached to the job are determined by the employer to be superfluous to the current needs and purposes of the employer. The FWC accordingly considered that a significant variation of the remuneration to be paid either by way of a salary increase or decrease, does not equate to the employer no longer requiring “the job” to be performed.
The FWC found that the number of Emergency Services Officers had not reduced, nor had the roles been altered such that the functions, duties or responsibilities no longer reflected the roles occupied by the employees. So, the FWC decided there was no genuine redundancy as defined in the FW Act.
Redundancy and redeployment process matters
In Deborah Hallam v Sodexo Remote Sites Australia Pty Ltd [2017] FWC 4105, the FWC found that an employer’s dismissal of a relief project manager following a decision to overhaul the system of relief pools involved genuine redundancy. In particular, the project manager lacked the skills or qualifications to fill other available positions. The FWC accordingly dismissed the application.
However, the Commissioner commented on the company’s redeployment process, regarding it as deficient.
The Commissioner considered that the company should have engaged in consultation at an earlier time, quarantined some positions to which people could be redeployed, and extended the length of the redeployment period.
The Commissioner also commented that the project manager had to navigate her own way through the process because the company had provided her with inadequate information, noting that because the company was part of a multinational group, the Commissioner needed to apply “heightened scrutiny” to its procedures.
These observations give an indication of the higher level of practical employer assistance needed when redeployment considerations arise as an issue.
Authors: Richard Bunting, Consultant; Jane Harvey, Partner; and Alexander Thomas, Graduate.
