Workers Compensation and Redundancy – Case Summary

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Recent case law has given further guidance on ‘best practice’ when an employee, who is in receipt of workers compensation payments, finds that their position has become redundant.

In the case Mathew Cliffe v Construction Glazing Pty Ltd (U2014/11773) 2015 FWC 1008 the Fair Work Commission (‘FWC’) heard that Mr Cliffe (‘Cliffe’) worked for Construction Glazing Pty Ltd (‘CG’) from August 2007 – July 2014 when his employment was terminated for reasons of redundancy. At the time of termination, Cliffe was receiving workers compensation payments, with such payments continuing after his termination.

In its decision on 11 February 2015, the FWC determined that CG had satisfied the 3 elements of the ‘genuine redundancy’ legislation and therefore the termination was found not to be an unfair dismissal.

So how did the FWC come to this finding?

Case Facts

Due to a workplace injury, Cliffe worked restricted duties at CG from 24 January 2014 to 6 May 2014 and was then absent from work from that date.

On 27 May 2014, Cliffe was given 28 days notice that CG would be making major changes to the organisation which may result in his redundancy. The relevant Union lodged dispute notification with the FWC. CG then confirmed Cliffe would be made redundant, however gave him an additional 4 weeks’ notice due to workers compensation requirements.

Cliffe disputed that CG did not comply with the Fair Work Act (‘the FWA’) requirements for genuine redundancies and claimed CG did not comply with consultation provisions in the relevant enterprise agreement. He asserted it was reasonable to re-deploy him rather than make him redundant. He claimed the dismissal was harsh, unjust and unreasonable and sought reinstatement.

Relevant Legislation:

Unfair Dismissal (s385 of the FWA) occurs when a dismissal is harsh, unjust or unreasonable and is not a case of genuine redundancy.

Genuine Redundancy (s389 of the FWA) occurs if the following 3 elements are satisfied:

1. the job is no longer required to be performed by anyone due to operational changes;

2. consultation obligations of the Employer are satisfied; and

3. it is not reasonable to re-deploy the employee at the time of termination.

Ruling:

1 – OPERATIONAL NECESSITY: The FWC ruled that:

(a) CG had experienced a “substantial and sustained downturn in sales” that necessitated the reduction of employee;

(b) The workers compensation legislation does not prohibit an employee receiving workers compensation payments from being made redundant.

2 – CONSULTATION: The FWC ruled that:

(a) The consultation clause in the Enterprise Agreement applied in this case;

(b) The following actions satisfied the consultation requirements:

a. consultation notice provided on 27 May;

b. discussions/meeting with the union representative (representing Cliffe);

c. discussions/meeting with Workers Compensation Advocate (representing Cliffe);

d. letter of notification of redundancy to Cliffe on 25 June;

e. offer to meet with Cliffe to discuss the redundancy.

f. delay in making Cliffe redundant at the request of WorkCover; and

g. the file note of the abovementioned meetings;

3 – UNREASONABLE TO RE-DEPLOY: The FWC ruled that:

(a) The Chevron group, to which CG forms a part of, was a group of Associated Entities, so consideration needed to be given to the ability to re-deploy the employee to any of these other entities;

(b) There were no jobs or positions within the Chevron Group that Cliffe could be re-deployed to at the time of termination, with regard given to the nature of the duties and the physical restrictions on Cliffe. While his skillset was relevant, his physical wellbeing and incapacity to work were also relevant factors.

Due to satisfying these 3 elements, the termination was deemed a ‘genuine redundancy’ and as such was found not to be an unfair dismissal.

Tips for Employers considering redundancies:

  • There must be a “significant and sustained” downturn or other such significant factor to satisfy the first element of genuine redundancy, and this downturn is the reason for redundancy. The lack of future work in the pipeline was also a relevant factor.
  • If considering redundancies, ascertain what the relevant consultation requirements are before issuing any notices.
  • If there are Associated Entities to your organisation, re-deployment to these entities must be considered before redundancies are made.
  • Consider using an objective criteria when selecting which employees will be made redundant.
  • Keep file notes (of both organisational meetings regarding the decision of redundancy and meetings/discussions with employees)
  • Although an employer may consult an employee with no agreement being reached, this does not necessarily mean that the consultation obligations have not been satisfied.

If you would like further information or advice in regard to workers compensation and redundancy, please contact our team of lawyers.

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