Five employ­ment law cas­es that shook the world: #4 No redun­dan­cy con­sul­ta­tion, no unfair dismissal

As part of a series of arti­cles we are exam­in­ing five employ­ment law cas­es that shook the world (or at least mem­bers of the Aus­tralian HR community).

Sec­tion 385 of the Fair Work Act 2009 pro­vides that a claim for unfair dis­missal can­not be made if the dis­missal was a case of gen­uine redun­dan­cy”. Sec­tion 389 defines gen­uine redun­dan­cy as fol­lows (with our emphasis):

(1) A person’s dis­missal was a case of gen­uine redun­dan­cy if:
(a) the person’s employ­er no longer required the person’s job to be per­formed by any­one because of changes in the oper­a­tional require­ments of the employer’s enter­prise; and
(b) the employ­er has com­plied with any oblig­a­tion in a mod­ern award or enter­prise agree­ment that applied to the employ­ment to con­sult about the redun­dan­cy.
(2) A person’s dis­missal was not a case of gen­uine redun­dan­cy if it would have been rea­son­able in all the cir­cum­stances for the per­son to be rede­ployed with­in:
(a) the employer’s enter­prise; or
(b) the enter­prise of an asso­ci­at­ed enti­ty of the employer.”

In Maswan v Esca­da Tex­til­ver­trieb T/A ESCA­DA [2011] FWA 4239 Fair Work Aus­tralia (as it then was) was called upon to deal with an appli­ca­tion for unfair dis­missal by Mr Maswan. Fair Work Aus­tralia had no dif­fi­cul­ty in find­ing that Mr Maswan had been dis­missed for rea­son of redun­dan­cy. It was also clear that the employ­er had failed to fol­low the pro­vi­sions of the Gen­er­al Retail Award 2010 which required it con­sult employ­ees in respect of redun­dan­cies. It there­fore fol­lowed that that Mr Maswan’s employ­ment was not a case of gen­uine redun­dan­cy as defined by the Act.

The more dif­fi­cult ques­tion was whether the lack of con­sul­ta­tion meant that Mr Maswan had been unfair­ly dis­missed. Unfair dis­missal pur­suant to sec­tion 385 of the Fair Work Act 2009 includes the require­ment that the dis­missal is harsh, unjust or unreasonable.”

Vice Pres­i­dent Wat­son had this to say in respect of Mr Maswan’s dis­missal in this con­text (with our emphasis):

[39] In my view a deci­sion to dis­miss on account of redun­dan­cy will only be harsh, unjust or unrea­son­able if the ratio­nale for the deci­sion is seri­ous­ly under­mined or if there is a seri­ous error in pro­ce­dure such that ren­ders the ter­mi­na­tion unfair in the cir­cum­stances. Here the deci­sion appears open to the employ­er to make. The fail­ure to con­sult is not a triv­ial mat­ter. But as it is clear that con­sul­ta­tion was high­ly unlike­ly to have negat­ed the oper­a­tional rea­sons for the dis­missal or lead to any oth­er sub­stan­tive change, I do not believe that the fail­ure to con­sult pri­or to the date of ter­mi­na­tion ren­dered the dis­missal unfair. Giv­en the evi­dence in rela­tion to the oper­a­tional need to restruc­ture, I am of the view that it is like­ly that Mr Maswan would have been dis­missed in any event, even if time­ly con­sul­ta­tion had occurred.

[40] In all of the cir­cum­stances I am not sat­is­fied that the ter­mi­na­tion of Mr Maswan’s employ­ment was harsh, unjust or unreasonable.

[41] For the rea­sons above I find that Mr Maslan’s dis­missal does not fall with­in the def­i­n­i­tion of a gen­uine redun­dan­cy in the Act because of the fail­ure of Esca­da to com­ply with its oblig­a­tions to con­sult over pro­posed ter­mi­na­tions aris­ing from changes at the workplace.

[42] I also find that the ter­mi­na­tion of his employ­ment is not harsh, unjust or unrea­son­able as the deci­sion was the result of a sound­ly based busi­ness deci­sion to restruc­ture the oper­a­tions and merge two posi­tions. The fail­ure to con­sult did not lead to a dif­fer­ent con­clu­sion to that which would have, in all like­li­hood, been reached had con­sul­ta­tion occurred. There­fore this fail­ure does not ren­der the dis­missal unfair. The appli­ca­tion is dismissed.

The case is there­fore author­i­ty for the propo­si­tion that fail­ure to com­ply with con­sul­ta­tion oblig­a­tions con­tained in a mod­ern award does not nec­es­sar­i­ly mean an asso­ci­at­ed ter­mi­na­tion of employ­ment will be an unfair dis­missal, if the con­sul­ta­tion would not have made any dif­fer­ence to the deci­sion to ter­mi­nate employment.