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Consultation and genuine redundancies: how far do employers have to go?

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This article was written by Charlotte Fenton and Annabelle Paxton-Hall.

In Paul Williams and Ors v Staples Pty Ltd [2017] FWC 607, the Fair Work Commission (FWC) ordered that 4 employees be reinstated after finding that their dismissals were unfair and were not genuine redundancies. The decision illustrates the approach the FWC will take in determining whether a dismissal is harsh, unjust or unreasonable in circumstances where the 'genuine redundancy' jurisdictional objection is not upheld.

Implications for employers

  • Employers should familiarise themselves with their consultation obligations (including the level of participation required of any committee) in an applicable modern award, enterprise agreement or even an employment contract.
  • Consultation must be meaningful and allow employees enough time to provide feedback. Employers must genuinely consider any feedback received.
  • The selection process for redundancies must be transparent.
  • Employers should contemplate whether any future positions would be appropriate for redundant employees to be redeployed into before terminating their employment.

Facts

On 5 July 2016, Staples Australia Pty Ltd (Staples) announced that 12 employees from its Erskine Park warehouse would be made redundant. Staples' rationale was that the redundancies were needed to improve the company's financial position.

Six days later, Staples announced its intentions at a Joint Consultative Committee meeting (JCC). Staples told the JCC that employees would be selected according to a selection matrix and that this process would be concluded by 13 July.

Employees were chosen and told that unless alternative employment was obtained, their employment would cease on 20 July. None of the employees were redeployed.

Following the dismissals, 4 employees lodged unfair dismissal applications.

Staples raised a jurisdictional objection before the FWC arguing that the dismissals were genuine redundancies under section 389 of the Fair Work Act and could not have been unfair.

The applicants maintained that the redundancies were not genuine because Staples had not complied with the relevant consultation requirements under the Staples Enterprise Agreement 2014-2016 (Agreement). They alleged that Staples failed to facilitate any meaningful consultation with employees or the JCC because the process was finalised over a very short period of time.

The decision

Genuine redundancies

The Agreement required Staples to provide information to employees and invite them to comment on the impact the relevant proposed changes (such as redundancies) would have on them and their families. Staples was also required to include the JCC in the decision making process.

Commissioner Cambridge found that Staples failed to provide employees with an opportunity to question the basis for their selection and did not adequately consult the JCC. Staples only informed the employees and the JCC once the final decision had been made. The "astonishingly fast process" meant that the consultation was "unduly hasty and largely tokenistic".

The FWC rejected the jurisdictional objection because the consultation requirements had not been complied with.

Although it was unnecessary to do so, the FWC also considered whether there were any redeployment opportunities available to the applicants.

In December 2016, Staples employed 19 warehouse employees in accordance with clause 28 of the Agreement. Clause 28 required Staples to employee 20 warehouse workers between January 2014 and December 2016. The FWC found that it would have been reasonable to redeploy the applicants into these pending positions. However, the lack of adequate consultation and the hasty decision making process meant that the potential for redeployment was not properly considered.

Unfair dismissal

Commissioner Cambridge considered there to be significant procedural deficiencies in Staples' decision making. Its failure to comply with the consultation obligations was manifestly unjust and the resulting terminations were unreasonable. The FWC went further, finding that the dismissals were also harsh, because of Staples' failure to consider redeployment opportunities.

The FWC ordered the applicants be reinstated in light of the available redeployment opportunities, the fact that there was no evidence of any deterioration in the employment relationship and the applicants' unblemished work records. Continuity of employment and the obligation to restore lost pay was also ordered.


Paul Williams and Ors v Staples Pty Ltd [2017] FWC 607

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