Company downturn leads to permanent staff cuts but casual work still available
The Fair Work Commission (FWC) recently dealt with an unfair dismissal application where a worker challenged his termination, arguing it was not a genuine redundancy.
The worker had been employed by his company since November 2022 and was dismissed in December 2024 following what the employer claimed was a downturn in business.
The worker argued that his dismissal was unfair because substantial work remained available, evidenced by the company's continued employment of numerous casual workers.
He said the employer failed to follow proper consultation processes and didn't explore reasonable alternatives that could have preserved his permanent position.
The worker also raised concerns about the employer's compliance with enterprise agreement provisions regarding redundancy procedures.
The worker started employment with a traffic management company as a casual employee in November 2022. During 2024, his employment status changed to permanent under clause 24.8 of the company's enterprise agreement with the Construction, Forestry, Maritime, Mining and Energy Union (CFMEU).
This clause automatically converted employees who worked on a regular and systematic basis for more than six weeks to permanent employment status.
At the time of the worker's dismissal, the company employed 13 permanent employees and 32 casual employees. The business operated in the traffic management industry, where work patterns could be irregular and clients sometimes requested specific employees for particular jobs. This industry context proved relevant to the FWC's analysis of the redundancy's genuineness.
The operations manager explained that business conditions had started declining in the lead-up to the October 2024 state election.
This downturn continued after the election due to uncertainty surrounding several large projects. The manager argued this decline meant he could no longer guarantee sufficient work to maintain all permanent employee positions at full-time capacity.
On 19 November 2024, all permanent employees received a text message outlining the company's position regarding employment changes. The message explained: "Due to current capacity constraints, from today we are unable to maintain all full-time positions at this time.
As a result, we are implementing options for affected employees: 1. Reversion to Casual Employment: Employees may choose to revert to casual status effective immediately. 2. Redundancy Option: Alternatively, if you prefer, we can proceed with making your position redundant."
After receiving this message, the worker contacted the operations manager, who told him "it was nothing to worry about" and said words to the effect that "everyone was receiving the same notice."
No further discussions occurred between the parties about the potential redundancies, except for unrelated matters including a dispute about a parking fine incurred during work hours.
On 10 December 2024, the operations manager sent an email containing identical content to the November text message to all permanent employees. The worker said he felt "blindsided" by receiving this email at his personal address rather than discussing the matter on-site.
He then contacted the company union delegate on 12 December 2024, who told him she was unaware the emails had been sent but "confirmed to [him] her belief that the redundancy was genuine and shortage of work meant everyone would be going back to casual employment."
The FWC examined the case under section 389 of the Fair Work Act, which defines genuine redundancy through three key requirements. First, the employer must no longer require the person's job due to operational changes.
Second, consultation obligations under relevant awards or agreements must be satisfied. Third, reasonable redeployment within the employer's enterprise must not be possible.
The Act requires that "the person's employer no longer required the person's job to be performed by anyone because of changes in the operational requirements of the employer's enterprise."
The FWC accepted the operations manager's evidence about insufficient work to maintain permanent roles, despite the worker's arguments about continuing casual employment for many employees.
The FWC noted an important distinction in workplace restructures: "The test is whether the employee's 'job' is no longer required to be performed, rather than the employee's 'duties'."
The enterprise agreement contained specific consultation provisions that the FWC needed to assess. The agreement required that the employer "will consult with the Union prior to making any decision to terminate make redundant or any other form of cancelling the employment contract for any Employee."
The operations manager provided evidence of union consultation, stating the union had provided wording for the employee communications.
Additional consultation requirements appeared in the agreement regarding major workplace changes. This clause demanded notification and discussion with both the union and affected employees about changes likely to have significant effects.
The FWC found these obligations were met through the November and December communications, which included information about expected impacts and encouraged employees to seek clarification.
The worker argued consultation was inadequate because discussions occurred via email rather than face-to-face meetings. However, the FWC determined the enterprise agreement didn't specify particular consultation methods.
The operations manager had remained available for further discussions, but the worker didn't pursue this option before accepting redundancy on 13 December 2024.
According to the decision, the Fair Work Act states that dismissal is not genuine redundancy "if it would have been reasonable in all the circumstances for the person to be redeployed within: (a) the employer's enterprise; or (b) the enterprise of an associated entity of the employer."
Given the accepted finding of insufficient permanent work, the only available positions were casual roles.
The worker received two clear options: accept redundancy with full entitlements including Building Employees Redundancy Trust (BERT) payments, or remain employed under casual arrangements.
The FWC stated: "That the position offered was not acceptable, does not negate the fact that [the employer] did offer an option for redeployment and as such, I find that [the employer] have complied with their obligation to consider all reasonable options for redeployment."
The FWC concluded all legal requirements for genuine redundancy were satisfied. The decision stated:
"Overall, I am satisfied that [the worker's] dismissal was a genuine redundancy as defined in s.389. Therefore, [the worker's] dismissal cannot be an unfair dismissal." This finding prevented continuation of the unfair dismissal claim under the Fair Work Act.
The FWC explained: "Having found that [the operations manager] had made the operational decision that he no longer required the permanent roles, it follows that the permanent roles became redundant, even though the duties have been redistributed to casual employees."
The case demonstrates that genuine redundancy can occur even when similar work continues under different employment arrangements, provided proper consultation occurs and reasonable redeployment options are offered.
The FWC concluded: "As such, his claim cannot continue" and ordered that the worker's application be dismissed.
