Exploring Redeployment options following Redundancy

19 June 2013

In the recent case of Mary Stephanou v Taffcorp Pty Ltd T/A Athlete’s Foot [2013] FWC 1993, the Fair Work Commission considered the issue of reasonable redeployment.

The Athlete’s Foot terminated the Applicant’s employment by reason of redundancy following a large company restructure.  The Applicant argued that she was unfairly dismissed because Athlete’s Foot did not consult with her and did not redeploy her to a lower-paid position of Assistant Accountant, which had been filled shortly before her position was made redundant.  She submitted that she was covered by the Clerks Private Sector Award 2010 (“the Award”) and argued that the Athlete’s Foot did not comply with the consultation provisions outlined in the Award.

The Athlete’s Foot argued that the Commission had no jurisdiction to determine the matter because Ms Stephanou was a professional and was not covered by the Award.  It submitted that there was no obligation to consult with Ms Stephanou about the restructure.

The Athlete’s Foot objected to the application on the basis that the Applicant was not a person protected from unfair dismissal at the time her employment was terminated, because the termination of her employment was a case of genuine redundancy within the meaning of the Act.

The Commissioner found that she was not a clerk but a professional and that Ms Stephanou’s “primary purpose” as a Group Accountant involved responsibilities of a professional nature.  The Commissioner found that she was not covered by the Award and therefore the Respondent did not have the duty to consult her regarding the restructure.

Genuine Redundancy

The Commissioner found that it would not have been reasonable under s.389(2) of the Act to terminate the new employee (to lower-paid Assistant Accountant) so that Ms Stephanou could have redeployed. 

The Commissioner stated:

“I doubt that the Act envisages the Commission determining, except in unusual or particular circumstances, that an employee who is employed in a full-time ongoing position, which is not redundant, should be dismissed to make way for an employee whose position has become redundant.”

However, the Commissioner did not “entirely rule out a possibility of this kind in certain circumstances”.  The Commissioner contemplated that “a consideration might apply where casual employees or labour hire employees are filling a vacant position on a temporary basis, or an employee is yet to commence employment when the position becomes redundant and redeployment comes under consideration”.

The Commissioner found that the consequence of this was that the position occupied by the Applicant was no longer necessary for the operational requirements of the Athlete’s Foot and was therefore redundant.  It found that there was no position available to which she could have been redeployed.  Therefore, the Commission found that the termination of the Applicant’s employment was a case of genuine redundancy within the meaning of s.389 of the Act.  It determined that it had no jurisdiction to hear the merits of the application and therefore the application was dismissed.

Lessons for Employers

• The decision has raised the possibility that employers may have to fire contract or casual workers to allow for a retrenched employed to be reasonably redeployed within the meaning of the Act.
• While the Commission did not determine that it was appropriate in this case, the Commissioner did raise the possibility that in some cases where employees fill a vacant position with casual or contract workers, it would be necessary to terminate such workers to allow for redeployment of a full-time ongoing employee.
• While this concept is yet to be tested, employers should continue to exercise caution before making a position redundant. In particular, employers should comply with the requirements of consultation with the effected employee and exploration of redeployment options before moving to termination of employment.