Redeployment and redundancy:
What are the issues?
By Mike Toten on 26 November 2010 A new provision introduced by the Fair Work Act 2009 is that an employer cannot rely on the ‘genuine redundancy’ provisions in order to avoid a claim of unfair dismissal, unless it would have been unreasonable in all the circumstances for the employee to be redeployed either elsewhere in the employer’s business or in an associated business entity. This provision has raised some questions about what ‘redeployment’ actually means.
This article examines the concept of redeployment in detail.
What the Act says There are two relevant provisions in the Fair Work Act. 1.
‘Genuine redundancy’ is defined as the employer no longer requiring the job to be performed by anyone. Exclusions from this requirement apply for small businesses, employees with less than 12 months service and award/agreement provisions that specify other exclusions (see s121). Transfer of business situations where the employee is employed by the new business and past service entitlements are carried over are also exempt (s122).
So, too, are transfer situations where the employee rejects an offer of employment with the new business that is substantially the same as his/her previous employment conditions, which leaves the employee no worse off overall than before, and which carries over previous accrued entitlements. Note: s311 provides that the employee must be employed by the new business within 3 months of ending employment with the old one for a transfer to take effect.
Div 3 (s389) states that an employee will not be able to lodge a claim of unfair dismissal in the event of genuine redundancy for operational reasons (ie changes to the operational requirements of the business that mean that the employer no longer requires the job to be performed by anyone). This is conditional on the employer having met any legal obligations to consult with the employee about proposed redundancy.
Would have been reasonable in all the circumstances for the person to be redeployed within the employer’s enterprise or the enterprise of an associated entity of the employer’.
Note: this is a new provision that did not appear in the former WorkChoices legislation. Therefore, it is necessary to consider carefully the meanings of ‘redeployment’ and ‘associated entity’. Job protection provisions in state awards usually allow employers to apply to their State Industrial Relations Commission to vary the general severance pay prescription if the employer has obtained acceptable alternative employment for the employee. Associated entity ‘Associated entity’ is defined by s50AAA of the Corporations Act 2001.
The section is linked to above — basically a business is ‘associated’ if it is legally related to the principal business, if the principal controls it, has a qualifying investment, significant influence or material interest in it; or, alternatively, if the associate is in a similar position in relation to the principal entity. What actually is redeployment?
Redeployment can be broadly defined as the transfer of an employee to another job within the same organisation or an ‘associated entity’.
However, the term is not formally defined in the Fair Work Act, so it is necessary to look at case law, most of which was determined under earlier legislation. It is not sufficient to find any other job (eg a lower-level or lower-paid one) in the organisation for an employee in danger of retrenchment, unless the employee willingly agrees to accept it.
Otherwise, a demotion or employment conditions that are substantially less favourable to the employee will amount to a breach of the employment contract, and therefore either an unfair dismissal or a genuine redundancy (the latter meaning that redundancy entitlements will be payable).
- Whether the work performed is similar to previously (eg uses similar skills, knowledge and abilities)
- Whether terms and conditions of employment are similar to previously, and no less favourable overall
- Whether the new work location does not significantly inconvenience the employee, compared to the old one
- As per the legislation, whether the employee’s previous service is taken into account when calculating service-based benefits
- Whether the employee willingly consented to any changes that were less favourable, and whether any duress was applied by the employer. Note: courts/tribunals have tended to look for positive evidence that the change disadvantaged the employee, an absence of evidence one way or the other tends to be interpreted that the change was acceptable.
