How not to do redundancies

“Act in haste, repent at leisure” is a proverb which comes up so often in employment law that I have sometimes been tempted to get myself a tattoo of those words.  (If the tattoo was not to my liking, of course, the tattoo would then itself be a perfect example of the proverb).  A recent decision of the Fair Work Commission shows how a hasty action to implement redundancies can lead, if not to leisurely repentance by the employer, then at least to an obligation to reinstate employees with back pay.

Most HR professionals will be aware that employees do not have access to the unfair dismissal jurisdiction where their employment ends on the basis of “genuine redundancy”.  However, the question of what is “genuine” has several important elements.  First, “genuineness” requires compliance with consultation obligations in awards or enterprise agreements.  Second, dismissal will not involve a “genuine redundancy” if it would have been reasonable to redeploy the dismissed employee.

The employer in this case was bound by a collective agreement, which required consultation.  The employer described its process as “expedited” consultation.  Just how expedited it was is demonstrated by a simple timeline; the decision to implement redundancies at its warehouse was announced on 11 July, the selection of the employees to be made redundant was made on the evening of 12 July, and the employees were advised on the morning of 13 July.

The Commission did not agree that this process was “expedited”.  Rather, the Commission said that what the employer described as consultation was “unduly hasty” and “largely tokenistic”.  The employer, said the Commission, had engaged in “disingenuous gestures” which meant that “the implementation of the redundancies were so significantly non-compliant as to be grossly deficient”.  (By this point, you are probably starting to understand why this article is called “how not to do redundancies”).  It didn’t help that the employer had given an undertaking to the Commission, when the collective agreement was being made, to invite employees to provide their views in relation to decisions about workplace change.  This was not done. Employers who fail to honour undertakings made to the Commission should not be too surprised to find that things in the Commission do not, thereafter, go so well.

If you are thinking at this point that it couldn’t have got much worse for the employer, you would be wrong.  The employer was unable to show that there had been proper consideration of redeployment (especially as the employer had another business unit nearby which, unlike the warehouse, did not appear to be losing money).  Finally, the employees selected for redundancy were selected on the basis of a “selection matrix” which the Commission described as a “hasty process that was implemented without proper consultation and with an absence of any transparency” which used inherently subjective criteria  and which did not allow the employees to identify even the most “blatant mistakes” in the process.

The consequence of this litany of failure was that four of the employees who brought unfair dismissal claims succeeded in obtaining orders for reinstatement, with back pay.  Perhaps the only victory for the employer was that the Commission determined that the employer was entitled to set-off the redundancy payment against the orders for back pay.

The case demonstrates that consultation with employees is not something which can be done on a “tick and flick” basis.  Consultation doesn’t give employees a right of veto over management decisions, but unsurprisingly, taking on board the ideas of employees will make employees more accepting of those decision (and may even lead to ideas which make the decisions better).  Equally, employees who are selected for redundancy will usually be more accepting if the selection process involves objective criteria into which the employees have some input.  Selection criteria like “Lives the Company Values and Commitments”, which was used in this case, can too easily be a cover for the settling of old scores.

So, although implementing workplace change expeditiously is always a good objective, trying to do it so quickly that it is all over before anyone can object is likely to bring you unstuck.  You might be able to put up with the pain from the ink in your hastily chosen new tattoo, but the pain from the ink on the pages of an excoriating judgment from the Fair Work Commission is likely to interfere with your leisure for a much longer time.

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March 7
Employment Law