Redundancies: FWA decision creates even more risk

by 24 Jan 2012

In a potentially far-reaching decision, Fair Work Australia (FWA) has found that the redundancy of a senior manager was not genuine because the employer failed to offer the chance of redeployment to a lower position within the organisation.

In the unfair dismissal case Margolina v Jenny Craig Weight Loss Centres Pty Ltd, FWA found that despite the dissolution  of the managerial role held by the former employee, the respondent was not a genuine redundancy because there were indeed other positions available – albeit with substantially less responsibility and much lower salary.

It was found that Jenny Craig failed to discuss alternative employment options with the employee prior to the official redundancy notification, and therefore failed to meet the pre-requisite in s.389(2) of the Fair Work Act which states:

“A person’s dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within:

  1. The employer’s enterprise; or
  2. The enterprise of an associated entity of the employer”

Jenny Craig submitted to the commissioner that it would not have been ‘reasonable’ to redeploy the former employee, as “We felt it was such a drop in responsibility and remuneration it was a complete insult.”

However, according to evidence submitted to FWA, the former employee asked several times if there were any other possible positions, and Jenny Craig failed to offer the entry-level job that was available. Instead the organisation contended there were no senior leadership roles available which were commensurate with the expertise and leadership qualities of the former employee.

Under cross-examination by FWA, it was put to the former employee that given the high level of responsibility, remuneration and perks of her former role, she would not have taken on “any old entry-level role”.

However the respondent submitted that she would indeed have taken on a lower position to better meet her family commitments. As a consequence, the FWA full bench made the decision that the situation of the respondent made redeployment ‘reasonable’ under all circumstances.

Before you make your next redundancy:

  • Identify all lower-paying and/or diminished-responsibility positions that the employee has the necessary skills, qualifications and experience to perform

  • Ask the employee whether he/she would be willing to perform any of the lower-paying and/or diminished-reasonability positions identified

  • If the employee is willing, offer such positions to the employee concerned as an alternative to making that employee’s position redundant and reflect such changes in a new ‘variation to employment’ employment contract (if relevant)

-Stephanie Zillman


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