COO's main task was raising capital, which was 'no longer needed,' says company
The Fair Work Commission (FWC) recently dealt with a case involving a worker who claimed unfair dismissal after being made redundant from his position at a software development company.
The worker argued that his dismissal was not a genuine redundancy, stating that his role was still needed and that he could have been redeployed within the company or its associated entities.
He also questioned the company's compliance with consultation requirements and the timing of his dismissal in relation to recent company developments.
Position made redundant
The case centred on a worker who started as a contractor before being employed in November 2021 by a software development company in its start-up phase. Despite having various titles such as chief operating officer (COO) or administrative manager, the worker's main role was to raise capital and attract investors.
The company's focus changed after it secured funding from an investor called Ventureon. This shift led to the worker's position being made redundant on 24 November 2023. The company argued that after getting this funding, they no longer needed someone to raise capital.
They said that the worker's other tasks, like approving expenses and invoices, were taken over by a new chief information officer who had the technical skills the company now needed.
Determining genuine redundancy
The FWC looked at whether this dismissal met the criteria for genuine redundancy under section 389 of the Fair Work Act. These criteria include:
1. The employer no longer needed the job to be done by anyone because of changes in how the business operated.
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2. The employer followed any rules about talking to employees about redundancy that were in an award or agreement.
3. It wasn't reasonable for the employer to give the person another job in the company or a related company.
The FWC referred to a recent case, Helensburgh Coal Pty Ltd v Bartley [2024] FCAFC 45, which said:
"A dismissal that is a 'case of genuine redundancy' is immune from relief under Pt 3‐2. That is so even if it might unambiguously qualify as 'harsh, unjust or unreasonable'."
Operational requirements amid redundancy
The FWC examined whether the company really no longer needed the worker's job. They noted that 'operational requirements' can include things like how the business is performing, what the market is like, and ways to make the business more efficient.
The FWC cited an earlier case, Ulan Coal Mines Limited v Howarth and others [2010] FWAFB 3488, which said:
"What is critical for the purpose of identifying a redundancy is whether [the worker] has, after the re‐organisation, any duties left to discharge. If there is no longer any function or duty to be performed by [the worker], [their] position becomes redundant..."
Based on this, the FWC found that after the company got funding from Ventureon, they no longer needed someone to raise capital, which was the worker's main job.
Consultation and redeployment considerations
The FWC decided that the company didn't need to talk to the worker about the redundancy because there was no rule saying they had to in any award or agreement that applied to the worker.
When thinking about whether the worker could have been given another job in the company, the FWC looked at the principles from another case, Pettet and Ors v Mt Arthur Coal Pty Ltd [2015] FWC 2851.
This case said that when deciding if someone could be redeployed, you need to think about what jobs were available at the time, what qualifications were needed, and what skills and experience the worker had.
The FWC decided that the worker couldn't have been given another job in the company, stating:
"I am satisfied on the balance of probabilities that [the worker] could not be redeployed by [the employer]. When [a former CEO] stepped down from his role as a CEO, [another individual] was engaged in February 2024. [The former CEO] had the Real Estate expertise which [the worker] had at the time of [the worker's] redundancy. Therefore, [the worker] could not be redeployed in this role. There was no position for him with [the employer]."
The FWC also looked at whether the worker could have been given a job in any related companies but decided this wasn't possible or practical.
In the end, the FWC decided that this was a genuine redundancy under section 389 of the Fair Work Act. They said:
"Therefore, I am satisfied that the dismissal of [the worker] was a genuine redundancy under s.389 of the Act and [the worker] is not eligible to seek a remedy for unfair dismissal."
This case shows how important it is for employers to clearly explain why a job is no longer needed when making someone redundant. It also shows that they should think about whether they can offer the person another job in the company.