How to make tough decisions and stay within the law
By Tass Angelopoulos, Principal at Tass Angelopoulos Workplace Lawyer
Lockdowns have returned to a number of states in Australia because of COVID-19 outbreaks. The Greater Sydney Area lockdown, at present, is ongoing and has been extended. The federal and state governments in Australia are, subject to conditions, providing financial support to employers to keep employees on their books. Likewise, employees, subject to conditions, are being provided financial support when they their hours have been reduced and have lost remuneration because of the lockdown orders.
However, even if with financial support, the mechanisms that are in place to reduce an employee’s income are limited. The “job keeper enabling direction” that was available last year is no longer available. Unless the business meets the stringent provisions of the stand down provisions set out in s.524 of the Fair Work Act 2009 (Cth) (FW Act) or agreement can be reached with the employee to reduce hours, the ability to legally reduce an employee’s income in accordance with those directions is not available.
This will be problematic for full time, part and casual employees employed on a regular and systematic basis when the work is simply no longer there. A breaking point will arrive, particularly as the lockdown drags on (as it is doing in Sydney), when one or more of the jobs of one or more of those employees can no longer be sustained and employees need to be dismissed for redundancy reasons. It is important for businesses to have regard to their obligations under the unfair dismissal, general protections and anti-discrimination laws when dismissing employees for redundancy reasons.
A business must ensure that:
- the job no longer needs to be done by anyone
- no reasonable redeployment opportunities at the time of the redeployment are available in the in the enterprise or that of an associated entity; and
- if the employee is covered by a modern award or enterprise agreement, the business has met the consultation requirements set out in that award/agreement.
When each of the above elements are met, the dismissal is described as a genuine redundancy and prevents the employee from pursuing an unfair dismissal claim (ss.385(d), 389 FW Act). Further, as long as no other extraneous factors are taken into account, the risk of a general protections claim or anti-discrimination claim are reduced.
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Job no longer required
A redundancy occurs when the employer no longer requires the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise. Operational requirements include the past and present performance of the business and the state of the market in which the business operates.
In the COVID-19 lockdown environment, evidence of a downturn in business and that “that particular job” is no longer required will be more readily evident. The evidence of the downturn should involve an assessment of the needs of the business and which jobs the business can and can no longer sustain. “That particular job” is employee’s functions, duties and responsibilities and the employment type, full time, part time or casual.
A business’s assessment of the operational environment should, in the COVID-19 lockdown environment, include considering the various financial benefits that are provided by the relevant state and federal governments. However, even with that support, that evidence confronting the business is that that particular job cannot be sustained.
If a group of employees are performing the same job and some of those employees are going to be selected, ensure that a skills assessment related to the job is performed and that no discriminatory or other factors extraneous to the role, e.g., a complaint made by the particular employee, are taken into account. If that occurs, the employee will be able to pursue a general protection and/or anti-discrimination claim.
Finally, a job is still redundant even if the job is still being performed by less employees doing the same job or will be allocated to another employee to be performed with that employee’s existing duties or the duties spread among other employees.
No reasonable redeployment opportunities
Reasonable redeployment opportunities require the employee selected for redundancy to be redeployed into any available existing job the employee can perform, having regard to the employee’s skills qualifications and experience, job location and remuneration. That can include a lower paid role. It is up to the employee to accept or reject the role. If the employee rejects the role the employer can apply to the Fair Work Commission and seek an order that any statutory redundancy pay set out in s.119 of the FW Act should be reduced in whole or in part.
Redeployment should also involve considering retaining an employee in a different status. For example, a full-time employee may be offered redeployment as a part time or casual employee and a part time employee may be offered redeployment as a casual employee. However, there may be some practical difficulties going forward when redeployment involves changing the employment status. Because of the continuity provisions of the FW Act and long service leave legislation, accrued leave and service entitlements will remain on the books for service pre redundancy.
Finally, if a business has associated entities within the meaning of s.50AAA of the Corporations Act 2001 (Cth), then, if the businesses of the associated entities are integrated, reasonable redeployment opportunities available there must also be considered and offered. This includes interstate and overseas associated entities. However, with lockdowns and border restrictions, it is unlikely that such redeployment opportunities would need to be offered as they would not be reasonable.
Read more: Can your employer require you to disclose your vaccination status?
Consultation
If an award or agreement applies, it sets out the consultation obligations as well as the requirement to put matters in writing. For non award/agreement employees, consultation is not obligatory.
At the core of consultation is openness and discussion. That does not mean a business has to agree to every proposal put forward by an employee. Nor does the business have to disclose commercial in confidence information about the business as part of the consultation process.
It is important to keep an open mind and give the employee the opportunity to influence the decision. That means, the decision is not final until the consultation process is over and that the business must have regard to a proposal put by an employee. The employee may identify an option that the business didn’t turn its mind to and provides a workable solution to maintain the employment.
There are no hard and fast rules about time frames. They will vary depending on the size of the business and the environment. For example, a bigger business is likely to have at least a 2-week consultation period whereas a smaller business may have a week or less. Further, the COVID-19 lockdown environment may reduce that consultation period even more to a couple of days.
There should be at least two consultation meetings and the termination meeting. The size of the business and the circumstances will affect the number of consultation meetings.
Meeting one
Once a business has identified the employee whose job is to be made redundant and may be dismissed because of the redundancy, and has considered any reasonable redeployment opportunities, the business should, as soon as possible, arrange to meet with the employee. It is important to explain what that meeting is about - in particular, that the employee is at risk of being dismissed for redundancy and explain the factors that have led to the decision to make the job redundant. The business should also explain that it has considered reasonable redeployment opportunities. If there is an opportunity the business is offering to the employee, it should explain the position to the employee, the duties and the remuneration. If the business has a position description, it should provide it to the employee. Let the employee know that they have until the close for the consultation period to accept that role.
Whether or not a reasonable redeployment opportunity has been offered, the business should provide the employee with the opportunity to make a contribution, to put any matter forward they want to, including any other opportunities within the business they believe they can perform. The business should let the employee know that it intends to meet them again and should specify the date. The business should also let the employee know that it will continue identifying any reasonable redeployment opportunities that may become available and likewise the employee is able to put forward any proposed redeployment employment opportunities they have identified and the business will consider any such proposal having regard to their skills and experience.
That means that the business should continue identifying any reasonable redeployment opportunities that are available up until the termination date.
The business should let the employee know if, circumstances don’t change and reasonable redeployment opportunities are not identified or they are but the employee does not accept the opportunity, then the employment will be terminated for reasons of redundancy. The proposed date of termination must be specified and can be around 1 day after the second consultation meeting
The business should confirm the meeting contents and the time frames in writing and provide them at the end of the meeting or shortly thereafter.
Meeting two
A second consultation meeting should occur at least 2-3 days after the first meeting.
At the second meeting, the business should confirm to the employee that this is the second consultation meeting mentioned at the previous meeting and in the correspondence, as the business is considering dismissing the employee as it has identified the job for redundancy. The business should follow through the same steps as it did in meeting one including:
- letting the employee know whether or not it has, since meeting one, identified any reasonable redeployment opportunities and, if it has, offer the opportunity employment and explain its terms;
- the period of time to accept any available redeployment opportunity;
- give the employee the opportunity to contribute, respond and put any proposals forward and consider any such proposals in the context of reasonable redeployment opportunities;
- the employment will be terminated on the date specified in the previous meeting for redundancy reasons unless a reasonable redeployment opportunity is available, and if it is, the employee accepts it.
The above will be confirmed in writing.
Termination meeting
If by the time of the termination meeting, no reasonable redeployment opportunities are not available or the employee does not accept the employment opportunity available, the business should advise the employee of those matters and, for that reason, the employment is being terminated on that day.
Full time and part employees should be provided with all entitlements payable on termination of employment - pay in lieu of notice, redundancy pay (if there is more than 12 months’ service (section 120(1)(a) FW Act), accrued annual leave and associated entitlements, and, if applicable, long service leave.
If the business is a small business, that is, at the time of dismissal it has less than 15 employees (between it and any of its associated entities), then it is not obliged to provide the redundancy pay (s.120(1)(b) FW Act) to its full time and part time employees.
As dismissal for redundancy reasons, is a dismissal, it must be confirmed in writing (s.117 of the FW Act).
Casual employees do not receive any of the above benefits on termination for redundancy (s.123 FW Act). However, they may be entitled to long service leave, depending upon their length of service with the business.
Other matters
During COVID-19 lock down periods, the meetings can be conducted online. If the employee refuses to participate in any meeting or disengages in the process, it does not have to be held up. The business can continue it in writing by email. The employee should be advised that the process is continuing by email as they have chosen not to participate in the consultation process.
If an employee provides a medical certificate during the consultation period, there may be a requirement to hold off on the process depending on the contents of the medical certificate. A medical certificate does not of itself mean the process must stop. As the process has already started, it would be difficult for an employee to argue that they were dismissed contrary to the FW Act because of a temporary absence because of illness or injury contrary to s.352 of the FW Act. However, the contents of the medical certificate may, if the process continues, and the employee is dismissed, give rise to a claim that the employee exercised a workplace right and has been otherwise dismissed because of a disability (ss 340 and 351 FW Act).
If an employee is offered a reasonable redeployment opportunity in the same location and refuses it, the employer can apply to the Fair Work Commission to reduce or negate the redundancy pay, and will most likely be successful in a reduction if it meets the definition of acceptable employment (s.120 FW Act). That provision also enables the Fair Work Commission to reduce the redundancy pay if the business provides evidence that it does not have capacity to pay the redundancy pay. This is a very high hurdle and does not get satisfied easily.
Finally, if no award or agreement applies, consultation continues to be good business practice as it also provides a framework for discussion around reasonable redeployment opportunities.