Why did the FWC decide the redundancy was genuine?
The Fair Work Commission (FWC) recently dealt with a case involving a design team leader who claimed unfair dismissal after being made redundant by his employer, Laminex Group Pty Limited, a kitchen design and manufacturing company.
The worker argued that his redundancy wasn't genuine because suitable alternative positions existed within the organisation.
He pointed to a job advertised on the same day as his dismissal that he believed he was qualified for, claiming the employer failed to consider him for redeployment as required by law.
The case hinged on the definition of "genuine redundancy" under the Fair Work Act and whether the employer had met all legal requirements before terminating the worker's employment.
The worker had been employed as a designer from June 2021 before being promoted to design team leader in November 2023. His role involved leading the design team in all aspects of the design process from customer engagement to completion.
By April 2024, Haven (a sub-brand of Laminex) was experiencing significant financial difficulties. The national sales manager testified that Haven "had not been hitting their sales targets and were falling behind budget by 40 percent a month" and was "making a loss of approximately $225,000 per month."
The company faced broader challenges with housing activity "fallen to the lowest levels in 15 years" and Victorian sales down by 10%. In response, the national sales manager testified that "each functional business unit of Laminex including Haven was required to find operational efficiencies and reduce headcount."
For a redundancy to be genuine under Section 389 of the Fair Work Act, three criteria must be met: the job is no longer required due to operational changes; consultation obligations have been met; and redeployment within the organisation wasn't reasonably possible.
The FWC found the first criterion was satisfied—the company no longer needed the design team leader position. The national sales manager's evidence was that "the design duties performed by the Design Team Manager could be performed by the remaining Designers. The organisational structure was changed so that I would lead the team of Designers."
Regarding consultation, the FWC accepted evidence from the People and Performance Business Partner that the worker's position "was not covered by a modern award or enterprise agreement" and therefore there was no formal obligation to consult about the redundancy under Section 389(1)(b).
On the same day the worker was dismissed, the company advertised a "Completions Manager" position, later re-advertised as "Production Manager" with identical requirements.
The worker argued these roles had "substantially the same key responsibilities" as his previous position. During the hearing, he gave evidence about tasks he performed that matched the advertised requirements, including collaboration with designers, on-site support, and technical expertise.
However, the FWC accepted the employer's evidence that the advertised role required trade qualifications and cabinet-making experience that the worker lacked. The national sales manager explained:
"The Completions Manager role requires a trade qualification... [The worker] did not have any trade qualifications in the area of cabinet making which is a key requirement for the completions manager role."
While finding the redundancy genuine, the FWC was critical of how the process was handled. Neither the worker nor other staff were adequately informed about potential job losses.
Just a month before the redundancy, staff were told that Laminex "really believe[s] in the future of Haven and have the utmost confidence in the future of the business."
The worker was invited to what was described as a "Haven business update" meeting, only to learn his position was being made redundant. The FWC stated: "The use of a phrase like 'Haven Business Update' to notify an employee of an impending termination meeting is not helpful. The employee is effectively given no notice their job is in peril."
The FWC questioned the effectiveness of presenting a list of 100 jobs across Australia at the termination meeting: "I question the utility of handing over a list of one hundred jobs all over Australia, with no notice, at a meeting where the employee did not know he was going to be made redundant as a 'consultation' on redeployment."
Instead, the FWC suggested: "The preferable approach would be to warn them their position may be made redundant and give them time to consider the jobs with some assistance from Human Resources."
Despite these concerns about process, the FWC ultimately found: "I am satisfied that [the worker's] dismissal is a genuine redundancy as defined in s389. [The worker's] dismissal cannot be an unfair dismissal and [the worker's] claim cannot continue. I have therefore ordered that [the worker's] application be dismissed."
