A Fishy Redundancy

Nov 2nd, 2023

A recent unfair dismissal case has underscored the importance of engaging in consultation when making employees redundant, with the Fair Work Commission (FWC) recently ruling on a claim brought by a retrenched worker against his former employer.

This worker, a chef, had been employed for over three years and had gone on annual leave at the start of July 2023. The day before he was meant to return to work, his employer notified him that the business was in poor financial condition and that his role would no longer be required, with his dismissal to be effective immediately.

This sudden dismissal surprised the worker, who had not been informed about any issues with the business and their effect on his position. He also subsequently discovered that the owner of the business had taken over his role and that new part-time employees had been hired. Believing the claimed redundancy was not genuine & that his dismissal was harsh, he submitted a claim of unfair dismissal to the FWC.

In response, the employer claimed that financial stress had prompted the termination of the employee and the need to take over the role himself. Further, the new staff members were not performing the former employee’s new role, but significantly different tasks – making it further clear that he had not been “replaced” by them.

The case ultimately revolves around what exactly constitutes a ‘genuine redundancy’ – for this to occur, an employee’s role must no longer be required along with the employer following any consultation requirements in the relevant award, enterprise agreement, or other registered agreement.

After considering the circumstances, the FWC ruled that the redundancy had been for a legitimate reason – the business was struggling financially, and the owner was within his rights to take over the employee’s position. However, it also noted that the business was covered by a Modern Award – the Fast Food Industry Award 2020 – which requires a consultation process be engaged in when an employee’s position is at risk. The employer had fulfilled the first requirement for redundancy but had failed to engage in the necessary consultation.

The Commission further noted that the dismissal was made harsher by the lack of consideration shown to the employee. The employee had been dismissed via text message, and, in addition, was experiencing financial hardship and mental health difficulties. It ultimately concluded that the dismissal had in fact been unfair. As a result, the worker was awarded compensation equal to a week’s worth of wages, which represented the period he would have remained employed if a proper redundancy process had been followed.

Overall, the key takeaway from this case is that employers should be mindful of their consultation obligations, especially when doing so is a requirement of the relevant industrial instrument. It serves as a timely reminder that adhering to the appropriate procedures can often prevent the stress and time-consuming affair of responding to unfair dismissal claims.

2/11/2023 Back to News