FWC orders employer to pay worker three weeks' wages, amounting to $7,700
The Fair Work Commission (FWC) recently dealt with a case involving a worker who challenged her sudden dismissal after nearly eight years of service as a senior application manager. The worker claimed she was terminated without any prior notice or consultation, and that her employer failed to follow proper redundancy procedures.
The worker argued that despite her employer's claim of financial necessity, the company did not meet its legal obligations to consult with her before termination. She also maintained that her accrued leave entitlements mentioned in the termination letter remained unpaid, compounding the financial impact of losing her job.
Despite multiple attempts to contact her employer after receiving the termination email, the worker received no response, leaving her with unanswered questions about both the dismissal process and her outstanding entitlements.
The case centered on a senior application manager at Kognitiv Australia Pty Ltd who received a termination letter on 22 November 2024. The letter stated that "as a result of unforeseen delays in finalising the sale of the Enterprise Loyalty Business, the financial position of [the employer] had become untenable and that an immediate reduction in the size of [the employer's] workforce was necessary." This termination took immediate effect without any prior warning.
The employer had terminated all four of its Australian employees and appeared to have ended Australian-based operations entirely, now servicing Australian clients through overseas personnel based in Canada, where the parent company employed approximately 120 people.
The FWC first established that the worker was protected from unfair dismissal based on her income level and had filed her application within the required 21-day timeframe. The Commission determined that the Small Business Fair Dismissal Code did not apply since the termination related to the employer's financial circumstances rather than the worker's conduct or capacity.
The Commission examined whether the dismissal constituted a genuine redundancy as defined in Section 389 of the Fair Work Act. While the employer no longer required the worker's position due to operational changes, this alone was insufficient to make the redundancy genuine.
For a redundancy to be considered genuine under the Act, an employer must comply with consultation obligations in applicable modern awards or enterprise agreements. This essential requirement was not met in this case.
The Commission determined the worker was covered by the Clerks-Private Sector Award 2020. The worker's role involved managing accounts and providing remote support to clients who had purchased software from the employer.
Approximately half of her duties involved accounts work, including processing invoices. Based on these responsibilities, she was classified as a Level 3 employee under the award.
The Commission found that Clause 38 of the Clerks-Private Sector Award 2020 applied to the worker's employment. This clause requires employers to consult with employees about major workplace changes that are likely to significantly affect them, including termination of employment.
The Commissioner stated: "[The worker's] uncontested evidence that there was no prior consultation with her by [the employer] prior to [the worker] being advised on 22 November 2024 that her employment was being terminated by [the employer] with immediate effect. I do not consider that [the employer] has complied with the obligations imposed by clause 38 of the Clerks Award in relation to a decision likely to have significant effects on employees."
The worker had served the company for nearly eight years without performance issues. The Commissioner noted: "No-one put [the worker] on notice that this was occurring. No-one spoke to [the worker] about the termination even after [the worker] attempted to make contact with [the employer] to discuss the termination and the payment of accrued entitlements."
The worker did not seek reinstatement, which the Commission agreed would be inappropriate given the employer had ceased Australian operations and the worker had found new employment starting 10 February 2025 that paid "a slightly higher rate than she was receiving when employed by [the employer]."
In determining compensation, the Commission applied the "Sprigg formula," derived from the Full Bench decision in Sprigg v. Paul's Licensed Festival Supermarket. This formula estimates what remuneration the employee would likely have received if not terminated.
Given the business closure and termination of all staff, the Commissioner stated: "Given the circumstances I am unable to conclude that [the worker] would have remained employed, and therefore would have received any further remuneration, beyond the date on which the employment ultimately came to an end." Strictly applying the formula would result in no compensation.
However, the Commissioner noted: "'Sprigg is a useful servant but is not to be applied in a rigid and determinative manner.' I am mindful that the orders that can be made under s.392 are compensatory in nature."
The Commissioner concluded: "In the overall assessment of the circumstances, the summary dismissal of [the worker] would, in my view, have occasioned some economic dislocation and loss and I think it would be manifestly inadequate and inconsistent with the objective of Part 3-2 to provide parties with a 'fair go all round' that there be no order for compensation made."
The FWC ordered the employer to pay the worker three weeks' wages, amounting to $7,701, within 14 days of the decision.
