What rights do workers have when small businesses close without warning?
The Fair Work Commission (FWC) recently dealt with a case where a worker challenged her redundancy dismissal. After serving nearly 3.5 years at a sales office, she received unexpected news about her workplace's closure through an email, leading her to question whether proper redundancy processes were followed.
The worker, who was covered by the Clerks – Private Sector Award 2020, raised two significant issues. She argued she wasn't paid redundancy pay, and her employer failed to meet the Award's consultation requirements. The situation raised concerns when a human resources staff member acknowledged issues with the process.
The case developed further issues when the employer claimed exemption from certain obligations as a small business. This defence prompted the FWC to examine the organisation's true structure and whether they had fulfilled their legal responsibilities during the redundancy process.
The worker held a sales office position from May 2021 until November 2024, earning $50,960 annually. Her employment fell under the Clerks – Private Sector Award 2020, which mandated specific consultation procedures for workplace changes affecting employment.
The closure announcement came through on October 22, 2024, via email after a human resources staff member called the worker to "check her personal emails." Significantly, the staff member expressed concern about the process, stating she was "sorry she was told not to say anything but knew it wasn't being done right."
Following this notification, the worker had to communicate the closure to her colleagues. She later discussed alternatives with the store manager, including a proposal to maintain operations for six months to attempt a business turnaround, but this suggestion wasn't accepted.
The employer initially claimed to be a small business with only four employees, which would have provided protection under the Small Business Fair Dismissal Code. However, the FWC found evidence of a much larger operation through company documents.
The evidence revealed operations across multiple locations: 29 staff in Toowoomba, 12 in Inverell, 4 in Grafton, and 49 in Brisbane, including the managing director. The Brisbane head office maintained centralised control, including approval authority for all purchase orders.
As stated in the decision: "[The employer's] website described the Grafton store as a branch of [the employer], which has four stores in two states and more than 60 staff."
During the notice period, the worker managed customer complaints about cancelled orders without being able to explain the situation. She worked full business hours each day, frequently contacting human resources in distress.
The FWC emphasised in their decision: "Earlier advice about the decision to close and better sharing of information would likely have avoided the adverse effects of dismissal on [the worker]. Instead, she experienced personal distress and overload in the period after notice was given because of the extra work involved in closing down the store and the lack of support received during the notice period."
The decision further stated: "The lack of consultation about the business closure and its consequences for [the worker's] employment occurred in disregard of [the employer's] Award obligations. It led to a process that denied [the worker] natural justice."
The FWC determined: "On balance, I am satisfied that the unexplained procedural deficiencies rendered the dismissal unjust. [The worker] has been unfairly dismissed."
As a result, the FWC awarded the worker two weeks' pay compensation, amounting to $1,960 gross. The decision noted this compensation was separate from any redundancy pay entitlements, which could be pursued through the Fair Work Ombudsman or the courts.
The decision reinforced that while the business closure provided a valid reason for dismissal, employers must still follow consultation requirements outlined in relevant awards and agreements.
