Monday, July 22, 2019/ SmartCompany,
Discussions with employees about restructures and redundancies are difficult and emotions often run high. Unfortunately, these things are a natural part of operating a business and can be the result of a range of factors, from the introduction of new technology to a downturn in business.
With emotions running high, explanations about why a redundancy has occurred and what has happened to an employee’s job can sometimes get lost or confused. This is particularly so when an employer is required to downsize and redistribute the tasks of a redundant role amongst other remaining employees. Employees often ask, if some of the tasks remain within the business, then the job still exists, right?
This issue was recently examined by the Fair Work Commission (FWC), in a decision where a technical service manager claimed he had been unfairly dismissed when his position was made redundant.
The employee argued his dismissal was not a genuine redundancy because his job was still required. He claimed the duties of his role remained within the business but were merely redistributed among other employees. On the basis the redundancy was not genuine, he claimed to have been unfairly dismissed.
In determining the matter, the FWC considered the meaning of “genuine redundancy” as set out in the Fair Work Act 2009 (Cth).
There are three elements to genuine redundancy:
- The employer must no longer require the employee’s job to be performed by anyone because of changes in operational requirements;
- The employer must comply with any consultation obligations it has under a modern award or enterprise agreement; and
- Redeployment within the employer’s business or an associated entity must not be reasonable in the circumstances.
The main question to be resolved in this case was whether the employer no longer required the employee’s job to be performed by anyone.
The employer submitted it had experienced a downturn in business which necessitated the redundancy of the employee’s position and the redistribution of his duties among other employees.
The FWC considered what it meant for a person’s job to no longer be required and drew on the explanatory memorandum and other decisions which have considered similar situations. The FWC noted a job involves a collection of functions, duties and responsibilities and that where a re-organisation takes place, a redundancy will have occurred if the re-organisation results in there being no duties or responsibilities left for the employee to discharge.
In this case, the re-organisation resulting from the downturn in business meant the employer did not require anyone to perform the employee’s job.
The employee was also critical of the employer’s management of its business in general. He claimed that had the employer addressed inefficiencies in the business, his job would not have been redundant.
On this point, the FWC commented that: “The law more-or-less permits an employer to structure their business as they see fit. In this instance, the Fair Work Commission can take no recourse against what is clearly within the bounds of managerial discretion.”
The FWC ultimately held that the termination of the employee’s employment was a genuine redundancy and his unfair dismissal application was dismissed.
Lessons for employers
When re-organising a business as the result of changes to operational requirements, employers are within their rights to redistribute duties and responsibilities.
Where such redistribution results in an employee no longer having any (or enough) duties to perform, their job will be redundant, notwithstanding that some of their old duties remain within the business but with other employees.