Was there unfair dismissal or genuine redundancy in ‘struggling’ business?
A senior agent recently questioned her redundancy before the Fair Work Commission (FWC) after finding out that her former employer advertised a new role amid restructuring the business.
She argued that she was unfairly dismissed since she was suitable for the position and could have adjusted her pay and working hours if the employer had given her a chance.
The employee, Laura Toplass, sought an unfair dismissal remedy against her employer, BMM Productions Pty Ltd. The latter argued that Toplass' dismissal was a genuine redundancy.
Toplass started her employment as a model manager on 31 January 2022. At the time of her dismissal, she held the position of senior model agent - curve, working part-time four days a week.
The dismissal occurred on 23 July 23 2023, during a meeting with BMM’s chief executive officer and its director of operations. Toplass received no prior notice of the meeting.
During their talks, the CEO informed her that the business was struggling, personal funds were injected to sustain it, and her position was being made redundant. A written notice of termination was provided on the same day.
The notice attributed the dismissal to a recent review of the business' Sydney operation requirements, determining that the role of senior model agent - curve was no longer necessary.
The employer’s decision was explicitly stated not to reflect Toplass' performance. Compensation for redundancy and payment in lieu of notice was offered in accordance with the relevant awards.
Subsequently, on 29 July 2023, Toplass discovered an online advertisement by BMM for a managing agent. Believing she was suited for the role, she later learned that another individual had been appointed to the position, someone known to her and affiliated with another manager at BMM.
The CEO outlined BMM's employment practices, emphasising the expectation for agents to secure work for talent through various means, including cold calling and arranging auditions.
Additionally, it was highlighted that Bella Management Group Pty Ltd (Bella), a related entity to BMM, focuses on promoting diverse beauty standards, particularly representing 'curve' models.
The financial strain experienced by Bella from 2020, attributed to factors such as COVID-19 and the rise of artificial intelligence services, was presented as a backdrop to the decision-making process.
The CEO noted a 33% decline in sales in the NSW Curve division during the financial year 2022/23, prompting her to inject personal funds into the business and initiate a substantial review and restructure.
The CEO further clarified that discussions about financial challenges were held with employees prior to the dismissal, expressing her preference to avoid job losses. The introduction of new software, Hubspot, was mentioned as part of the restructuring process.
Ultimately, the employer reached a decision to make three positions redundant, including Toplass' role, and to hire someone with specific technical skills and fashion experience for a newly created full-time position.
Toplass argued that “she had the skillset to perform the new role,” adding that “had she been given the opportunity, she was willing to take a pay cut to stay with the business and was willing to move back to a full-time role.”
According to records, the evidence showed “the employer no longer wanted Toplass’ job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise.”
However, the FWC also noted the employee’s relevant award, which “requires employers to consult employees about major workplace changes, including changes in structure that are likely to have significant effects on employees.”
“Significant effects include termination of employment and job restructuring,” the Commission said.
Moreover, the FWC said a clause in the employee’s award “imposed an obligation on BMM to consult affected employees about the restructure it implemented in July 2023 when it dismissed Toplass and two junior agents.”
“The obligations included giving notice to the affected employees and discussing with them and their representative the introduction of the changes, the likely effect on them and measures to avoid or reduce the adverse effects of the changes.”
“Those discussions should have commenced as soon as practicable after a definite decision to restructure had been made. The clause required BMM to give the affected employees information in writing about the changes. In discussions about a restructure, employees may raise matters about the changes and the employer is required to respond to those matters promptly,” the FWC said.
“The obligation to consult on workplace change is a longstanding and important one, and it is an important workplace right that ensures fairness to employees during periods of change. BMM did not comply with any of the obligations,” it added. Thus, the FWC said there was no genuine redundancy.
As for the question of unfair dismissal, the FWC said the “decision to dismiss was made without giving Toplass information about the restructure and the opportunity to discuss whether she could play a role under the new arrangements.”
“Toplass should have been given that opportunity,” the FWC said. “In this case, there was scope for some accommodation of Toplass,” adding that there was a new role that the employer created.
“[The CEO] said that the new role would be for less remuneration [but] Toplass said that she would have taken a pay cut. [The CEO] said that the role was full-time, [and] Toplass said that she could have changed her arrangements and worked full-time,” the FWC said.
“The failure to consult had a significant impact on Toplass as it denied her a real opportunity to keep her employment,” it added. Consequently, the FWC found that the employee was unfairly dismissed. It then ordered the employer to pay her compensation.
