Businesses often look to redundancies as a way to deal with financial downturn or organisational restructures. To ensure compliance with workplace laws, it is critical for employers to follow a proper process when undergoing a redundancy. A key element to the redundancy process is the obligation to consider redeployment into other roles which, if not carefully handled, could lead to a successful unfair dismissal claim by an employee made redundant.

So, what needs to be considered when offering redeployment? What if the affected employee is too senior for the redeployment role? Every redundancy case is different, which naturally means there is no rigid formula for determining whether a particular redeployment is reasonable in all the circumstances.

This blog will explore some key cases on how the Fair Work Commission (FWC) looks at redeployment obligations to provide some practical guidance for your business.

What is redeployment?

Under the Fair Work Act 2009, an employee will not be able to bring a successful unfair dismissal claim if the termination of their employment was a result of a “genuine redundancy” (see section 385 of the Act). There are a few different requirements around what makes a redundancy genuine, one of which concerns redeployment. The Act says an employee’s dismissal will not be a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within the employer’s business or an associated entity of the business, and the employer did not redeploy them (see section 389 of the Act).

The Act does not provide explicit criteria for determining what makes an offer of redeployment reasonable. Generally, when considering reasonable redeployment opportunities, several factors are relevant in the decision making, such as:

  • whether there exists a job or a position or other work to which the employee can be redeployed;
  • the nature of any available position;
  • the qualifications required to perform the job;
  • the employee’s skills, qualifications and experience;
  • the location of the job in relation to the employee’s residence; and
  • the remuneration (pay and entitlements) that is being offered.

Let’s take a look at how the FWC has assessed the factors above.

Petranel Ferrao v Peter MacCallum Cancer Institute [2016] FWC 4953

Dr Petranel Ferrao was employed with the Peter MacCallum Cancer (PMC) Institute for 10 years. She was hired to lead a grant funded research project for a period of three years.  At some point during her tenure, her employer decided to pursue and prioritise projects in other areas. This resulted in Dr Petranel’s role being made redundant. Shortly after, Dr Petranel brought an unfair dismissal claim against PMC.

During the redundancy process, PMC advised Dr Farrao that they had explored redeployment opportunities, however they were unable to find any. Dr Ferrao, during the redundancy process, separately applied for two lower-level roles within the organisation. She was not offered either role due to her seniority.

The FWC pointed out several flaws in relation to PMC’s redeployment considerations. First, PMC assumed that Dr Farrao’s niche skills and research interests meant that she would not be appropriate for other roles, despite her ten-year long career in the organisation. Second, PMC assumed she was too “senior” for any other research role within the organisation, thereby excluding her from any considerations for junior roles. Third, PMC’s argument that Dr Farrao’s was given a chance to apply (as part of a competitive process) for junior roles was not enough to discharge its obligation to secure a role for Dr Farrao – the FWC commented that this “hindered” the genuineness of the redundancy.  In other words, they should have offered her the roles rather than required her to apply for them alongside other candidates.

On the above basis, the FWC concluded there was a real lack of real efforts on PMC’s part to achieve redeployment for Dr Farrao. Therefore, the FWC ruled Dr Farrao’s dismissal was not a case of genuine redundancy and (they also found) was unfair. Dr Farrao was awarded 26 weeks’ pay in compensation, minus 20 weeks’ pay which she had already received.

Alisea Khliustova v Isoton Pty Ltd [2023] FWC 658

Ms Khliustova was hired by Isoton as a software engineer. Isoton intended to expand its technical presence in India. At a certain point, Isoton faced financial difficulties and decided to downsize a number of roles, including 4 positions in Australia and a number of recruits in India. Ms Khliustova’s role was affected by this decision.

To ensure the redundancy of her role met the requirements of a “genuine redundancy”, Isoton needed to consult Ms Khliustova, as she was covered by the Professional Employees Award 2020. The Award requires employers to consult its workers about major workplace changes, such as a redundancy.

Isoton told Ms Khliutova that her role was going to be made redundant via an online meeting. She was not given the chance to voice her concerns before the redundancy was actioned.

Given the lack of consultation, Isoton was never in a position to properly discharge its obligations to secure redeployment for Ms Khliustova. It was not aware that Ms Khliutova had been open to the idea of working in its related entity in India. Isoton did not offer the role in India to her, as they “did not believe she would have accepted it as it was in India and a lower level or remuneration”. Ms Khliustova provided the relevant evidence to show that she was keen to travel and “experience the role for 2-3 months.” On top of this, Ms Khliustova was able to clearly demonstrate that the work she performed in Australia would have enabled her to perform at least one of the roles in India.

On the above basis, the FWC concluded Isoton’s failure to consult Ms Khliustova, in conjunction with its failure to secure her redeployment in its associated entity, meant that it was not a case of a “genuine redundancy”.

Key takeaway

When it comes to redundancy, employers are reminded that there is an obligation to redeploy affected staff where it is reasonable in the circumstances to do so. The bar for reasonableness regarding redeployment is quite high, as demonstrated above. Requiring an employee to apply for an alternative role (i.e., the “spill and fill” approach) is unlikely to fulfill the obligations of redeployment.

Employers must actively seek and secure a suitable role for the employee based on their skills, experience, aptitude and qualifications. All potential redeployment options should be considered, even if they are more junior, lower paid, or not directly aligned with the employee’s interests. This includes exploring opportunities within the employer’s associated entities.

These cases highlight the risks of making assumptions. These risks can largely be mitigated if employers engage in thorough consultation with affected staff to discuss all possible redeployment options and how the adverse effects of redundancy can be minimised.

If you are unsure about how a redundancy process works, or whether your business has satisfied its redeployment obligations, please do not hesitate to reach out to the HR Connect team today.

 

Disclaimer

The information provided in these blog articles is general in nature and is not intended to substitute for professional advice. If you are unsure about how this information applies to your specific situation we recommend you contact HR Connect for advice.

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