The Workplace Relations landscape is ever changing. In this article we summarise three cases regarding redundancy and employee transfers between entities that were decided in 2024 that employers need to know about.
Redeployment obligations in redundancy: How far do they go?
In Helensburgh Coal Pty Ltd v Bartley & Ors1, a Full Court of the Federal Court of Australia found the termination of 22 employees by way of redundancy was not a genuine redundancy because Helensburgh Coal (HC) could have redeployed those employees to perform work performed by independent contractors.
HC operates a mine extracting coking coal. In 2018 and 2019, it engaged two companies to supply workers to perform a range of services. Early in the COVID-19 pandemic, demand for coking coal fell significantly and HC told its employees that it had decided to implement changes to its operations which would result in a reduction to its workforce.
During consultation, the employees requested HC to mitigate against its decision by decreasing its reliance on contractors. While HC did reduce its contractor workforce by 40%, it proceeded to terminate 47 employees by way of forced redundancy. Twenty two of those employees brought unfair dismissal claims in the Fair Work Commission, claiming the dismissals were not ‘genuine redundancies’. Commissioner Riordan found in two decisions that the dismissals were not a ‘genuine redundancy’ because it was reasonable for HC to reduce the work available to contractors and redeploy the affected employees to perform that work. HC unsuccessfully appealed both those decisions to a Full Bench of the Fair Work Commission and then sought judicial review in the Federal Court.
Under the Fair Work Act, a redundancy will not be ‘genuine’ if it ‘would have been reasonable in all the circumstances for the person to be redeployed within its enterprise’. The Federal Court dismissed HC’s application, finding:
- ‘would have been reasonable’ requires some analysis of what an employer could have done to redeploy an otherwise redundant employee;
- ‘all of the circumstances’ may capture the possibility of an employer making work available to an otherwise redundant employee by reducing the engagement of other providers;
- it was reasonable in all the circumstances for HC to redeploy the impacted employees to positions occupied by contractors.
Key takeaways
Employers must therefore consider all redeployment opportunities, including to positions that may not technically be ‘available’ at the time of consideration, or risk a redundancy being found to be not ‘genuine’. This includes those held by independent contractors or a labour hire employee. It would be prudent to consider whether any of those positions will become available in the future.
At the time of writing this article, Helensburgh Coal has received special leave to appeal the judgment to the High Court of Australia.
It’s all about the ‘feel’? When is other employment ‘acceptable’ in a redundancy?
In Westpac Banking Corporation T/A Westpac2, Westpac successfully applied to the Fair Work Commission to vary the redundancy pay payable to an employee, Ms Dibden, from 7 weeks’ pay to zero.
Westpac’s application was made on the basis that it obtained ‘other acceptable employment’ for Ms Dibden, who was employed as a Senior Customer Service Specialist at a St George Bank branch in Cairns.
Following Westpac’s decision to close the branch Ms Dibden worked in, it offered her what it said was a ‘directly comparable’ position of Personal Banking Specialist (PBS) at a Westpac branch in Cairns. Ms Dibden advised she was not interested in a branch-based position and preferred another position. She asserted the PBS position was different to her customer service position. Westpac’s position was that the duties and responsibilities were the same. In late July 2024, Ms Dibden’s employment was terminated on the basis that she rejected the PBS position.
Under the FW Act, an employer may apply to the Fair Work Commission for a determination reducing the redundancy pay payable to an employee to a specified amount, which could be zero, in the following circumstances:
- where the employer obtains other acceptable employment for the employee; or
- the employer cannot pay the amount.
In the Fair Work Commission, Ms Dibden submitted that a Westpac branch had a ‘different culture and working environment’ than a St George one. Ms Dibden’s main contention, somewhat unusually, was that the positions were not acceptable because working in a St George branch ‘felt different’ than working for Westpac. In coming to the decision to exercise her discretion to reduce the redundancy pay to zero, Commissioner Hunt noted:
- Ms Dibden’s assessment of the similarity of the positions was not relevant;
- the redundant position and the alternative position do not have to be identical for the latter to be found ‘acceptable’;
- she was satisfied the conditions and entitlements were identical, the two branches were extremely close, the position descriptions and pay grades were the same;
- Ms Dibden had not worked in a Westpac branch and would not know how it feels;
- Westpac had discussed the PBS position with Ms Dibden over two months;
- it was appropriate for Westpac to contend the PBS position was suitable; and
- prior to Ms Dibden’s decision to decline the PBS position, Westpac had put her on notice that it would make an application to the Commission to reduce her redundancy payment to zero on the basis that it had obtained other acceptable employment for her.
Key takeaways
This case is a timely reminder to employers that:
- the Commission will apply an objective test when assessing whether the other employment is ‘acceptable’. That is, the personal views or preferences of the individual employee do not determine if a role is ‘acceptable’ or not;
- they should meet their consultation obligations and reasonably engage with an employee about the employment they have obtained;
- while positions do not have to be identical, they should carefully assess positions against each other when coming to a view about whether the new position is ‘acceptable’; and
- if they intend to make an application to the Commission to vary redundancy pay, it would be prudent to put the employee on notice of this at the earliest available opportunity.
‘No deal’ in employee transfer to new entity results in $42,000 compensation order
In Dupre v Excell Protective Group Pty Ltd3, the Fair Work Commission found Mr Dupre was dismissed by Excell and that the dismissal was harsh, unjust and unreasonable. Excell was ordered to pay Mr Dupre $42,552.06.
Mr Dupre began employment with Excell in 2015 pursuant to a contract of employment. Due to issues with licensing of Excell’s business, it did not trade between June 2015 and July 2017. During that time Mr Dupre was paid by a different entity, SPS Security Service PL. SPS Security was not an associated entity of Excell. Excell began paying Mr Dupre in July 2017.
In March 2024, it was announced that Excell’s management team would be transferred to another company, Zipd. Mr Dupre received a new employment contract, position description and non-disclosure agreement for the transfer to Zipd. Mr Dupre raised a number of concerns about the proposed contract. The next day he was invited to a formal performance review meeting despite having not had any performance issues to date.
Approximately three weeks later, Mr Dupre attended a meeting with a number of his colleagues in which they were advised that if they did not sign the new employment contracts, this would be treated as a resignation, bringing their employment to an end. He did not sign the contract. On 11 April 2024 Mr Dupre attended a further meeting with management and advised he would not sign the contract without amendments and he would not resign. By the end of the meeting, he understood he had been dismissed by Excell.
On 17 April 2024 he received an email from Excell advising its position that he had resigned on 11 April 2024. On 19 April 2024 Mr Dupre responded clarifying he had not resigned and that he wanted to remain employed under his initial contract of employment. He requested Excell confirm that he would do so by 22 April 2024. After he did not receive a response, Mr Dupre confirmed in writing on 23 April 2024 that Excell had repudiated the contract and the employment relationship, and as a result he had been dismissed by Excell.
Deputy President Masson ultimately found Mr Dupre had been dismissed by Excell and he did not resign, there was no valid reason for the dismissal and the dismissal was procedurally unfair.
Key takeaways
Employers should:
- determine if they have consultation obligations under any industrial instrument that they must comply with when proposing to transfer employees between entities;
- be aware that they cannot force an employee to sign a new employment contract;
- be open to discussing concerns raised by an employee; and
- seek legal advice if they are considering taking any action against an employee who will not sign a new employment contract, as doing so may come with considerable risk.
Closing Loopholes
Who could forget the suite of changes that came into effect in 2024 under the Closing Loopholes reforms? Read our articles below to get up to date on those reforms:
How we can help?
Our Workplace Relations team can provide employers with practical advice and guidance on how to manage redundancies having regard to Helensburgh Coal and where other acceptable employment has been obtained for the employee. The team is well placed to advise on proposed terminations so employers can mitigate the risk of successful claims and compensation orders.
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Disclaimer: This article provides general information only and is not intended to constitute legal advice. You should seek legal advice regarding the application of the law to you or your organisation.