Learn what HR needs to prepare in a company restructure to avoid a similar fate
The Federal Circuit and Family Court of Australia (FCFCOA) recently decided over the claim of an employee who said his employer’s restructuring and redundancy were “shams” designed to terminate his employment.
The case offers a closer look at what an employer could prepare in a similar situation and a possible strategy for defence.
From 1996, the employee worked as a medical librarian. The employer is the largest health service provider in Victoria, and has about 20,000 employees, many of whom are doctors or other health professionals.
In January 2020, the employer terminated his employment due to redundancy following a restructuring of its library services. The employee argued that the restructure and his redundancy were “shams, designed to terminate his employment because he had made a number of complaints in relation to his employment.” The employee then filed before the FWC and took personal leave.
Was the restructure a “sham?”
The employee argued that his dismissal should be investigated, claiming the “motivations of those involved in the decision to restructure the library team could be taken into account” and “if those motivations were for proscribed reasons.” He alleged that the employer’s restructure was “an integral step in the decision to dismiss him.”
As for its defence, the employer said “the restructure and the eventual dismissal of [the employee]” were the “flow on effects of a genuine review of [their] services conducted” at an earlier period. According to the court, the “subtext” was that the review was done before the employee’s complaints. Hence, the employer said the “subsequent restructure and dismissal were genuine” and “not motivated by [his] complaints.”
The employer has the burden to prove that a restructure is genuine
The court said the employer has the “burden to prove” that the restructure and redundancy were genuine. In its decision, the court said that the employer could not prove it.
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“[The employer’s] case was that the [employee’s] position had to go to modernise the library. However, [it] did not satisfactorily explain why that was so.”
HR must be ready to present necessary guidelines for compliance
In assessing if the employer’s restructure was justifiable, the court looked at the models recommended by the Australian Guidelines for Health Libraries.
“For principal referral hospitals, [the guidelines] required five full-time equivalent librarians. [The employer] did not explain why it was necessary for the new structure to have four librarians rather than five … No explanation was given to the court about why the four-librarian model was preferred over the five-librarian model,” the court said.
The case demonstrates how relevant documents and references should be kept with HR to ensure that the employer is ready to defend a possible restructure with a comprehensive explanation. It is important to note that any shift in the company where an employee’s position could be affected should be properly substantiated.
The court’s decision
The court ruled that “in the absence of explanations,” it was not “persuaded that the [employer] did need to remove the [employee’s] position from the team.”
It further said that it was not convinced that the “eventual dismissal was the “natural consequence” of the employer’s “needs.”
Thus, it said that the employee was dismissed “for the reasons he alleged.”
The parties would address the questions of the amount of compensation and penalties at a future hearing. The FCFCOA’s decision was handed down on 1 April.