Genuine operational reasons are genuine

by 23 Jan 2007

By Craig Donaldson

AsHuman Resources magazine was going to press, the Australian Industrial Relations Commission (AIRC) handed down a decision clarifying what genuine operational reasons are when it comes to dismissing staff under WorkChoices.

The decision is a favourable but double-edged sword for business. The Commission said genuine operational reasons should be taken in their natural meaning, and any employee dismissed for such reasons should not expect relief if they dispute the termination. However, the onus is on the employer to prove a genuine commercial justification for redundancies.

In the case before the Commission, the general manager of a Village Roadshow complex in Melbourne was dismissed as a “direct consequence” of the theatre’s closure and demolition. The manager, who had worked for the company since 1986, successfully took issue with the termination after an initial ruling found he was a multi-skilled employee who was eminently redeployable. However, the Federal Government took the case to the Commission’s full bench, who overturned the decision and found that the manager’s dismissal was for no other reasons than genuine operational ones – the cinema was closed, demolished and no other positions were available.

The decision provides a welcome clarification for business, in that it need not fear dubious unfair dismissal claims as much. While businesses with less than 100 employees have been freed of unfair dismissal red tape under WorkChoices, bigger companies were still prone to long-running and sometimes costly unfair dismissal actions. However, companies must still go through the normal steps and do everything they reasonably can to redeploy workers.

There will always be unscrupulous employers. Smarter companies will not abuse WorkChoices, but take advantage of the flexibility offered in writing win-win employment contracts, as IBISWorld chairman Phil Ruthven notes in our HR business outlook story on page 12. Employment relationships that are based on fairness as well as give and take will go a lot further in doing more for a business than the short-sighted gains that could be reaped otherwise.