Failure to comply with redundancy requirements results in unfair dismissal
In the recent decision of Anne Maree Greaves v IAA Group Holdings Pty Ltd [2024] FWC 3523, the Fair Work Commission (FWC) held that an employer’s failure to consult an employee on a proposed redundancy resulted in unfair dismissal.
Facts
The Applicant, Ms Anne Maree Greaves, was dismissed from her employment with IAA Group Holdings Pty Limited (IAA) on 8 July 2024 by way of redundancy, while Ms Greaves was on medical leave.
Ms Greaves had been employed by IAA, a small healthcare business, for approximately 19 months in an administrative position. On 7 July 2024, Ms Greaves suffered an injury to her eye, rendering her unfit to work the following day. Ms Greaves attempted to provide IAA with a medical certificate but was ultimately unable to access IAA’s computer system to submit the certificate, due to the nature of her injury. Eventually, Ms Greaves contacted her supervisor Ms Carmelinda Papalia, and her Manager, Mr Anthony Smith, to advise them of her inability to work that day and subsequently take medical leave.
Ms Smith returned Ms Greaves’ call and expressed concern for her wellbeing. Ms Greaves then eventually reached Ms Papalia, who advised Ms Greaves that she had received an email from Mr Smith which outlined that Ms Greaves’ employment had been terminated effective immediately. As Ms Greaves was unable to access her emails, Ms Papalia read the termination email to her over the phone.
The email advised Ms Greaves that IAA would terminate her employment as the company had ‘fallen into financial stress’ and was required to ‘make changes to reduce liabilities effective immediately’.
Ms Greaves then filed an unfair dismissal application with the FWC on 24 July 2024.
Decision
In response to Ms Greaves’ application, IAA raised two objections. First, that IAA was a ‘small business employer’ at the time of Ms Greaves’ dismissal, and that the dismissal was consistent with the ‘Small Business Fair Dismissal Code’ (the Code), and second, that the dismissal was a case of ‘genuine redundancy’.
Application of the Code
At the outset, Commissioner Sloan of the FWC held that IAA was in fact a small business employer on the date of Ms Greaves’ termination of employment (that is, an employer that employs fewer than 15 employees, meaning that the Code applied to IAA).
IAA contended that the dismissal was consistent with the Code, arguing that Mr Smith had completed and signed a ‘Small Business Fair Dismissal Code Checklist’, which outlined that Ms Smith complied with modern award requirements to consult with Ms Greaves regarding her redundancy, as required by the Code.
Ms Greaves was employed under the Health Professional and Support Services Award 2020 (the Award), of which, clause 34 requires that the employee is entitled to ‘consultation about major workplace change’. In light of the evidence before it, the FWC was satisfied that no consultation took place with Ms Greaves regarding the change to her employment (i.e., the redundancy).
Commissioner Sloan considered Ms Greaves’ evidence that she denies that she was ever informed that her employment was in jeopardy, or that IAA was considering making her position redundant. IAA provided the FWC with evidence of minutes of meetings which purported to indicate that the business was in an increasingly poor financial position and that Ms Greaves was informed that her position was ‘at risk’. However, Commissioner Sloan found these documents to be unreliable and inconsistent, and ultimately afforded them no weight in assessing whether the dismissal was consistent with the Code.
For these primary reasons, the FWC found that Ms Greaves’ termination of employment was inconsistent with the Code as IAA did not consult with Ms Greaves prior to effecting her dismissal.
Genuine redundancy
To be satisfied that a dismissal was a genuine redundancy, the FWC was required to consider whether IAA no longer required Ms Greaves’ position to be performed by anyone due to changes in the operations requirements of the business and that IAA complied with any obligation under the Award to consult Ms Greaves of a redundancy. While the FWC was satisfied that Ms Greaves’ position was redundant based on the financial position of the company (and that this was a valid reason for dismissal), the FWC was satisfied that IAA did not comply with the Award’s requirement to consult with Ms Greaves of changes to her employment and therefore held that her dismissal was not a case of genuine redundancy.
These considerations were sufficient to determine that the dismissal was harsh, unjust and unreasonable, having regard to other factors including Ms Greaves’ psychological condition and inability to find other employment.
Accordingly, Commissioner Sloane ordered that IAA pay Ms Greaves $8,025.00 in compensation.
Take home message
This case reaffirms the care employers must take in commencing a redundancy process. Employers are bound by strict procedures under the Fair Work Act 2009 (Cth), modern awards and workplace policies in effecting redundancies. Most notably, it is essential that the employee is properly consulted on a proposed change to their employment. The failure to adhere to these processes may result in the unfair dismissal of an employee, causing further financial stress to your business.
This case also highlights that even small businesses protected by the Code can face issues if they fail to undertake a procedurally fair process to make a position redundant. Employers should strongly consider seeking legal advice before making positions redundant to reduce the risk of such claims.
For more specific information or advice on any of the material contained in this article, please contact Lincoln Smith on +61 413 581 617 or at lsmith@normans.com.au, or Annabelle Narayan on +61 8 8210 1292 or at anarayan@normans.com.au, or Edward De Luca on +61 447 784 887 or at edeluca@normans.com.au.
