Tuesday, 5 August 2014

Redundancy and Redeployment: Your Obligations

Employers are exempt from the unfair dismissal jurisdiction if the termination of that employee was a ‘genuine redundancy’. In order to be ‘genuine’, the employee’s termination must have met the following criteria:

  • The employer no longer required the job to be performed by anyone “because of changes in the operational requirements of the employer’s enterprise”;
  • The employer complied with any obligations contained in an applicable modern award or enterprise agreement; and
  • It was not reasonable for the employee to be redeployed within the employer’s enterprise or an associated entity of the enterprise.

In the following case, the Full Bench of the Fair Work Commission held that an employer’s requirement to provide redeployment options does not extend to positions held by contractors nor is it required to create new positions.

Case study: Teterin and Others v Resource Pacific Pty Limited t/a Ravensworth Underground Mine

In this case, Ravensworth informed twelve employees that their positions would be made redundant and referred the employees to a list of vacancies on its website (as well as its associated entities). None of the twelve employees were ultimately redeployed and they each subsequently lodged unfair dismissal applications.

The Union, on behalf of the employees, argued that the redundancies were not genuine as the employees could have been redeployed to carry out work that was being undertaken by contractors or other employees of Ravensworth on overtime.

In its defence, Ravensworth put forward the following:

  • Despite its extensive efforts, there were no redeployment opportunities available;
  • The contractors that were still required had specialist skills and equipment and therefore ttheir work could not be fulfilled by the outgoing employees. Furthermore, the number of contractor hours at the site had decreased by more than 70%, with regular contractor positions eliminated the previous year; and
  • The overtime payments made were often entitlements under the enterprise agreement rather than additional work and the absence of casuals at the Mine meant that overtime was the principal means of obtaining the necessary flexibility required by Ravensworth.

In dismissing the case, the Full Bench held in both instances that the Union was unable to provide concrete evidence that the overtime work nor the contractor work could have been translated into tangible positions.

In considering whether contractor work could be reassigned to the outgoing employees, it was held that contractor work could be considered within the realm of positions available. The Full Bench held that work performed by contractors should not be disregarded “if it means that consideration of the work being done by contractors is excluded from consideration as to whether a job, position or other work is ‘available”.

Ultimately however, the Union was unable to provide evidence “that work could be made available through the displacement of contractors or put forward a practical proposal as to how this could be done”.

Lessons for Employers

Employers should take comfort in the above decision, in that it demonstrates that the Fair Work Commission will not unreasonably interfere with a company’s legitimate operational requirements, by forcing it to reassess the make-up of its workforce.

When undertaking an operational restructure which may result in redundancies, employers must ensure that redeployment opportunities are fully explored within the company and its related entities and that that those efforts are documented. A decision not to redeploy an employee to a position must be objective in the circumstances and justifiable in light of the company’s operational requirements.

If you require assistance in the redundancy process, please contact HR Legal.


This article was produced by HR Legal. It is intended to provide general information only in summary format on legal issues. It does not constitute legal advice, and should not be relied on as such.