Genuine redundancies during the COVID-19 pandemic

In the recent case of Browne v MySharedServices Pty Ltd [2020] FWC 4445, the Fair Work Commission (Commission) has reasserted the importance of consultation, even during the current COVID-19 pandemic.

In this case, Mr Matthew Browne (the Employee) was dismissed without his employer, MySharedServices Pty Ltd (the Employer), undertaking any consultation prior to his termination. As a result, the Commission found that the Employee’s dismissal was harsh, unjust or unreasonable.

The Employee was dismissed by way of a phone call on 9 April 2020 and then brought a claim for unfair dismissal. The Employer claimed that the dismissal was a genuine redundancy, and therefore it could not be considered an unfair dismissal.

Redundancy Findings

The Commission first considered whether the dismissal was a genuine redundancy. For a genuine redundancy, section 389 of the Fair Work Act 2009 requires that:

  • the employer no longer requires the job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise;
  • the employer has complied with any consultation obligation in a modern award or enterprise agreement; and
  • it was not reasonable in the circumstances for the person to be redeployed within the employer’s enterprise or an enterprise of an associated entity.

The Commission found that there was clearly an operational change to the business, namely a 50% reduction in new business and 30% reduction in retentions, and that this meant the job performed by the Employee was no longer required to be performed by anyone.

The Commission was not satisfied that the consultation requirement was met. Under the Clerks Award 2009, which covered the Employee, employers are required to consult with employees regarding:

  • any change that may have a significant effect (including termination) on their employment;
  • the likely effect of the change; and
  • any measures being taken to mitigate the effect of the change.

In this case, the employer called the Employee and notified him that his employment had been terminated but did consult with the Employee at all and so could not demonstrate it had fulfilled the consultation requirements in the Clerks Award 2009.

The Commission found that the Employer did not properly consult and it reasserted that consultation is a key requirement of the redundancy process, even during the COVID-19 pandemic.

Unfair dismissal findings

Because the Employer failed to properly consult, it was open to the Commission to consider whether the termination was an unfair dismissal.

The Commission found that there was no valid reason for dismissal, that is, there were no issues with the Employee’s conduct or capacity to perform the role.

Further, the Commission considered the operation of JobKeeper at the time of the Employee’s dismissal, which had been announced the week prior. In considering JobKeeper it noted that the purpose of JobKeeper was to ensure employees maintained a relationship with their employer, in order to minimise redundancies and job losses.

The Commission found that even though the Employer in this case may not have understood the operation of JobKeeper when it decided to dismiss the Employee, neither did many other employers who were able to maintain employees until the JobKeeper payments came through.

The Commission found that the dismissal was unfair, unjust or unreasonable.

This indicates that the Commission considers that the impact of JobKeeper on an employer’s business can be a relevant consideration when determining whether a dismissal is harsh, unjust or unreasonable.

Key take-aways

Despite these unprecedented times, the requirements for genuine redundancy must still be met by employers, including the consultation requirement.

Additionally, in the context of a redundancy decision, employers should carefully consider the application of JobKeeper payments and provisions and how these may impact its relationship with employees.

Changes to the JobKeeper scheme begin from 28 September 2020, including a requirement for employers to reassess their eligibility. Employers who qualified for JobKeeper prior to 28 September 2020 and have experienced a 10% decline in turnover will be able to continue to use the JobKeeper enabling stand down provisions.

If you need further information about JobKeeper changes, how this may affect your employees or the redundancy process, please contact Griffin Legal here.

Learn more about the consultancy process here

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