When making employees redundant, if an employer fails to properly consult with those affected beforehand, the termination can be deemed not a genuine redundancy. If this finding is made, it is then open for the Fair Work Commission to find a termination to be harsh, unjust or unreasonable.
This is what nearly happened to a small real estate firm that experienced a downturn in trade, implemented a restructure to cope, making a sales rep redundant. The rep claimed he had not been consulted beforehand, and effectively presented with a fait accompli. This, he argued, meant he was not genuinely made redundant in accordance with the relevant terms of the award. Specifically, the employer did not fully comply with the requirements to consult with the employee about the redundancy prior to dismissing him.
The standard award clause is automatically invoked in a restructure in any case regardless of potential redundancies. It includes a requirement for the employer to give to affected employees details of proposed changes in writing. This information has to also include the expected effects of the changes. It was this step that the employer missed.
Technically then, it was not a genuine redundancy.
This in turn meant that the FWC had to decide if the dismissal was harsh or not. And that’s when the employer caught a lucky break. The FWC acknowledged, as did the rep himself, that the restructure was real, the redundancy was real. The FWC’s investigation of the restructure showed there was no doubt the business was in trouble and that regardless of process, the rep’s job was doomed.
The FWC decided that even though the consultation obligations hadn’t been fully met, the reality of the situation outweighed the procedural defect. It said “A failure to consult in accordance with the relevant industrial instrument does not necessarily mean a retrenchment was harsh, unjust or unreasonable.”
Furthermore, the FWC said “There is no evidence that compliance with the consultation provisions would have led to any different outcome” and this was crucial to the case being dismissed.
Procedural flaws are a bane for business, especially when what is going on is blindingly obvious, or ought to be. This decision shows that as far as restructures go, where there is misstep, the employer can argue the inevitability line and stand a good chance of not being caught by red tape.