Compliance requirements drive restructure, eliminating existing management role
The Fair Work Commission (FWC) recently dealt with an unfair dismissal application from a finance director who challenged his redundancy, finding that genuine redundancy requirements were satisfied despite his claims of targeting and available redeployment opportunities.
The case arose when the education company restructured its finance department due to cash flow pressures and compliance requirements, eliminating the finance director position while creating a new senior accountant role requiring different skills.
The worker argued his redundancy was not genuine, claiming he was personally targeted for removal and that the restructure was designed to create a more compliant finance department under the financial controller's management.
He maintained that he could and should have been redeployed to the new senior accountant position despite the lower salary, arguing his qualifications and willingness made redeployment reasonable.
The employer defended the redundancy as operationally necessary due to financial pressures and the need for Australian Accounting Standards Board (AASB) compliant financial reporting that the existing structure could not deliver.
The company maintained that the worker was not suitable for redeployment to the new role due to demonstrated deficiencies in required compliance areas.
Financial pressures drive departmental restructure
The restructure originated from a formal review conducted by the financial controller in January 2025, following instructions from the chief executive officer to address increasing cash flow pressures and compliance requirements.
The review identified the need for accurate monthly management accounts complying with AASB standards, requiring different skills than those provided by the existing finance director position.
Evidence showed the company faced genuine financial difficulties, including payment plans with the Australian Taxation Office, demonstrating cash flow problems.
The operational requirements had changed to prioritise compliance expertise over general financial management, making the existing finance director role unsuitable for meeting current business needs.
The Commission found the restructure was driven by legitimate operational changes rather than personal targeting of the finance director.
The financial controller's evidence about business pressures and compliance needs was deemed credible and rational, providing a sound foundation for the organisational changes implemented.
Redeployment assessment reveals skill gaps
The worker proposed an alternative restructure where he would transfer to the new senior accountant role while another employee would be dismissed, claiming this would deliver greater savings to the company.
However, the assessment revealed significant concerns about his suitability for the new position requiring AASB compliance expertise.
The financial controller provided specific examples of the worker's demonstrated shortcomings in areas critical to the new role, including Goods and Services Tax (GST), Pay As You Go (PAYG) withholding, and Business Activity Statement (BAS) issues.
While the worker had addressed these matters when raised, the pattern indicated insufficient expertise for a role centered on compliance requirements.
The Commission found these were objective reasons for concluding redeployment would not be reasonable.
The person ultimately appointed to the senior accountant role possessed extensive experience with International Financial Reporting Standards, which substantially align with AASB standards, demonstrating the specialised expertise required for effective performance.
Consultation requirements properly satisfied
The employer complied with consultation obligations under the Educational Services (Post-Secondary) Award 2020, which requires consultation about major workplace changes once a definite decision has been made.
The company provided written notice of proposed changes and their expected effects, followed by discussions about the restructure and potential alternatives.
The worker received advance notice on 26 May 2025 about the potential redundancy and was invited to a meeting the following day to discuss the proposal.
He was given the opportunity to present alternative proposals and raise matters for consideration before any final decision was implemented, satisfying procedural requirements.
The Commission rejected arguments that pre-deciding the restructure contradicted consultation obligations, noting that awards require consultation after definite decisions are made rather than before.
The process allowed for modification based on consultation feedback, though the worker's alternative proposal was found to be deficient for legitimate operational reasons.
Genuine redundancy elements all satisfied
The Commission found all three elements of genuine redundancy were met: the employer no longer required the job to be performed due to operational changes, consultation obligations were satisfied, and redeployment would not have been reasonable in the circumstances.
The finance director position was eliminated because changed operational requirements made it unsuitable for current business needs.
The worker's argument that core functions of his job continued to exist was rejected, with the Commission noting that positions frequently become redundant even when their functions remain necessary.
The relevant test focuses on whether the employer no longer wants the specific job performed, not whether individual duties continue in different arrangements.
The Commission dismissed claims that the redundancy was orchestrated to remove an obstacle or create a more compliant finance department, finding no evidence of ulterior motives.
The restructure addressed legitimate business needs for compliance expertise that the existing position could not provide effectively.
Alternative dismissal analysis confirms fairness
Even if the dismissal had not constituted genuine redundancy, the Commission indicated it would have found the dismissal was not unfair under general unfair dismissal criteria.
The employer had legitimate operational reasons for ending the employment relationship, with no issues relating to the worker's conduct or capacity in his existing role.
The process followed appropriate procedural fairness standards, providing consultation opportunities and considering alternative proposals before implementation.
The worker received lawful redundancy payments plus an additional two weeks' pay in recognition of his contribution, demonstrating reasonable treatment throughout the process.
The Commission found no harshness, injustice, or unreasonableness in the dismissal process or outcome.
The employer's decision to restructure for compliance and efficiency reasons represented sound business judgment rather than unfair treatment of the individual worker.
