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13 March 2014 Can a Change in Required Skills and Competencies Make an Existent Role Redundant?

By Richard Ottley, Partner and Ellen Davis, Paralegal


IN BRIEF

The Full Bench of the Fair Work Commission has recently concluded that where an employer wants to increase the skill level of a particular role for operational based reasons, it may do so by making the existing position redundant and replacing it with a new position that meets the businesses operational needs. The Commission in its decision has made it clear that this should only occur where it would be unreasonable for the existing employee to undertake the further required training.


THE FACTS

In Mackay Taxi Holdings v Wilson [2014] FWCFB 1043, the employer undertook a review of its business operational needs and determined that it needed to increase the capacity of the administration and the new role would require the person to have bookkeeping/accounting responsibilities and a Certificate IV in Bookkeeping. Ultimately it meant that the existing administration position would no longer be required.

The existing employee did not have these qualifications and to provide such training would take a minimum period of 12 months and require a monetary outlay that the business could not afford at the time. The employer also did not have confidence that the employee would complete the training. Based on these considerations the employer did not consider it reasonable to retrain the employee. The employer notified the employee that her position was redundant on the basis that she could no longer perform the duties required by the higher level position. The employer advertised the new position and allowed the employee to apply for it. A more experienced person applied for and was given the new position.

The employee subsequently filed an unfair dismissal claim against her employer.

Commissioner Booth at First Instance

The Applicant submitted to the Commission that the redundancy was not a genuine redundancy because 70% of the duties carried out in the current position would still be required in the new position. The Applicant further submitted that with the support of the company's accounts team and undertaking the formal training, she could have performed the new position to a high standard.

The Respondent however submitted that the board of the organisation had determined that the business needed restructuring with a view to increasing the capacity of the administration function at a higher level. It was therefore determined that there would not be sufficient work to keep a qualified bookkeeper and an administrator occupied full time resulting in the decision that the existing administrative position would no longer be required.

Commissioner Booth at first instance was not convinced that the changes instituted by the Respondent resulted in a genuine redundancy. Commissioner Booth concluded that the changes were made to a continuing and existing role which would not satisfy that statutory definition of redundancy which requires that the job is no longer required to be performed by anybody.

Appeal to the Full Bench

The Respondent upon appeal claimed that Commissioner Booth had erred in the conclusion that the changes were to an existing and continuing role. The Respondent submitted that the new requirement of higher qualifications was in fact required to give effect to new higher level duties making up the foundation of the new job and not mere add-ons to the existing role.

The Full Bench agreed with the above submissions and rejected the first instance decision. The Full Bench held that the requirement for a formal qualification was not a mere add-on but rather reflective of operational changes which gave effect to a requirement for new and higher level duties required to be carried out by an appropriate qualified bookkeeper.

In arriving at this decision, the Full Bench expressed the view that the question is not whether the original duties or tasks continue to be required to be performed, but rather that there are operational-driven changes to the position which would result in the job previously performed by the applicant no longer existing. In this regard the Full Bench quoted with approval, a passage from a decision of Hamberger SDP in Kekeris and A,. Hartrodt Australia Pty Ltd [2010] FWA 674 :

"When one looks at the specific duties performed by the applicant prior to her termination they have much in common with those of the new position in the new structure. The test is not however whether the duties survive. Paragraph 1548 of the explanatory memorandum makes it clear that it can still be a 'genuine redundancy' where the duties of a previous job persist but are redistributed to other positions. The test is whether the job previously performed by the applicant still exists."

POINTS TO TAKE AWAY

This decision provides a useful benchmark for employers when making operational changes to their business and considering whether to make a position redundant or not.

When employers are proposing operational changes which affect the position of an existing employee, they should give consideration as to whether, in line with their business interests, they can reasonably justify retraining or up skilling the existing employee.

As demonstrated in this case, the time and cost required to retrain an employee will be significant factors for consideration. A failure to genuinely consider retraining an existing employee may be viewed adversely by the Fair Work Commission as indicative of the employer's motives, and may affect their prospects of successfully resisting an unfair dismissal claim.

For further information, please contact:

Richard Ottley, Partner  |  Phone: +61 2 9233 5544  |  Email: rbo@swaab.com.au

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This article is not legal advice and the views and comments are of a general nature only. This article is not to be relied upon in substitution for detailed legal advice.

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