FWC highlights consultation requirements in business shutdown
The Fair Work Commission (FWC) recently dealt with an unfair dismissal case involving a branch manager who was dismissed following the closure of a retail location. The worker claimed he was not properly notified of his dismissal before it occurred, nor given any opportunity to respond to the reason for his dismissal.
The worker also argued that his dismissal was not a genuine redundancy because his employer failed to comply with consultation obligations required under the relevant industry award. These consultation requirements included providing notice of the change, discussing its effects, and offering information in writing.
The case raised important questions about procedural fairness in redundancy situations, particularly when employees are absent from work on workers' compensation.
The employer maintained that the worker's absence due to an anxiety disorder made proper communication difficult, setting up a clash between redundancy procedures and practical realities.
The branch manager had been employed at Steeline's Grafton retail business since September 2017 until November 2024, when he received a termination letter citing the closure of the branch and redundancy of his position. At the time of dismissal, he was absent on workers' compensation due to an anxiety disorder.
The employer, FNW Grafton Pty Ltd, argued that the worker's employment actually ended on 1 November 2024 when the store closed, not the 19 November 2024 date stated in the termination letter. This would have made the unfair dismissal application lodged on 4 December 2024 out of time. The FWC rejected this argument.
The FWC noted confusion about whether the employer qualified as a small business with fewer than 15 employees. The worker provided evidence showing the employer's director, Blake Burgess, owned several other related companies, potentially affecting redundancy payment entitlements. The FWC proceeded on the assumption it was a small business but recommended seeking legal advice about associated entities.
The FWC found the dismissal was not consistent with the Small Business Fair Dismissal Code because the employer failed to notify the worker of the reason for dismissal and did not provide an opportunity to respond before making the termination decision.
The employer argued that the worker's absence on workers' compensation made communication difficult. However, the FWC determined:
"There is no evidence that [the worker's] condition meant that [the employer] was not able to communicate in writing with [the worker]. [The employer] could have communicated the reason for [the worker's] dismissal in writing prior to making its final decision."
The FWC also found the dismissal was not a case of "genuine redundancy" under the Fair Work Act because the employer failed to comply with consultation obligations required under the General Retail Industry Award 2020, including giving notice of the change, discussing its effects, and providing relevant information in writing.
When assessing whether the dismissal was harsh, unjust or unreasonable, the FWC examined several factors specified in section 387 of the Fair Work Act 2009.
The FWC found that while the store closure constituted a valid reason for dismissal, this reason wasn't directly related to the worker's capacity or conduct. More importantly, the worker wasn't notified before the decision was made, nor given an opportunity to respond.
While the FWC acknowledged that the size of the business and lack of HR specialists were mitigating factors, they didn't excuse the lack of procedural fairness:
"I consider the complete lack of procedural fairness makes the dismissal unfair, despite the existence of a valid reason for dismissal (albeit not one which was strictly related to [the worker's] conduct or capacity) and despite finding that the size of [the employer's] business and a lack of specialist staff contributed to the procedural shortcomings."
The FWC determined that reinstatement wasn't appropriate since the store was no longer operating. When calculating compensation, it considered how long the worker would have remained employed if proper procedures had been followed.
The FWC estimated: "I consider three weeks is an appropriate estimate of how long it would have taken for [the employer] to properly consult with [the worker] and other employees about the closure of the Grafton store."
Because the worker had received workers' compensation payments during this period equal to his regular wages of $1,280 per week, he hadn't lost actual income. However, he missed out on superannuation contributions and ordered the employer to pay $441.60 in superannuation contributions.
This case demonstrates that even when a valid reason for redundancy exists, employers must still follow proper consultation procedures and provide affected employees with notification and an opportunity to respond, even when those employees are absent on workers' compensation.
