Case shows how procedural mistakes can invalidate otherwise legitimate redundancies
The Fair Work Commission (FWC) recently dealt with an unfair dismissal application involving a customer service officer who was made redundant without proper consultation. The case examined whether the redundancy was genuine and whether the employer met consultation requirements under the applicable award.
The worker argued that her dismissal was not a genuine redundancy because her duties were simply transferred to another employee rather than eliminated.
She also raised serious allegations about discriminatory comments regarding pregnancy and pointed to evidence that the company continued advertising for staff after her redundancy. Additionally, she argued that the employer failed to follow proper consultation procedures required under her award.
The worker was employed as a customer service officer for six months when she was made redundant on 15 October 2024. Her colleague, who was the other customer service officer, was also made redundant on the same day. The FWC examined whether the dismissal constituted a genuine redundancy under section 389 of the Fair Work Act.
The employer argued that financial difficulties made the redundancy necessary. The company had lost a major client in early 2024 and another key client in June 2024, creating flow-on effects. The director provided evidence that the company's external financial consultant warned that without serious changes, the business would be insolvent by February 2025.
Following a meeting with their accountant on 23 August 2024, the financial position became clear. The FWC noted that "[the employer's] accountant advised that the business was losing $20,000 a week and needed to make changes in order to be cash flow positive." The director then took steps to improve cash flow by renegotiating rental agreements, supplier terms, and reducing staff numbers.
The worker contested the redundancy's genuineness, submitting that "the tasks I performed in the role of Customer Service Officer were not distributed to other team members and the title of Customer Service Officer consequentially retired, instead it was reallocated in its entirety to a colleague demoted from his previous position of Fleet Supervisor, and in November 2024 a second person for the role was sought out via Seek."
The issue became whether the employer met its consultation obligations under the Clerks – Private Sector Award 2020. Clause 38 of this award requires employers to consult about major changes to organisation or structure that are likely to have significant effects on employees, including redundancies. The FWC explained that consultation obligations only arise when a modern award or enterprise agreement applies and contains consultation requirements.
The worker was only informed of her redundancy on the day of termination. She received a termination letter after the meeting without any prior discussion or opportunity for input. The FWC found that "at the very least, [the employer] should have had a discussion with [the worker] and her colleague in customer service, prior to actually making them redundant."
The award also required written notice of changes to affected employees under clause 38.2. The employer acknowledged during the hearing that they would normally give advance notice of restructuring and potential redundancies. The director said they would have "preferred" to have conversations with affected employees beforehand.
The employer's explanation for bypassing consultation centred on concerns about rumours within the business and worry that sensitive financial information could reach suppliers and competitors if they had told the customer service officers prior to termination. However, the FWC rejected these justifications, noting that the worker was contractually obliged not to divulge confidential information.
The FWC also examined the worker's allegations about the true reasons for her dismissal. The worker raised claims that her pregnancy motivated the dismissal, supported by witness testimony about allegedly discriminatory comments made by the director.
A former employee testified that he overheard the director say during a meeting about hiring a sales manager: "we need to make sure we don't employ anyone that could get pregnant and or have any health issues." The director consistently denied making this statement under oath, creating conflicting testimony for the FWC to resolve.
The FWC approached this evidence cautiously, noting that "the statement, if it was actually made, is flagrantly discriminatory." However, it found insufficient evidence to establish pregnancy as the reason for dismissal, stating: "I am not prepared to accept, on the evidence before me, that [the worker's] pregnancy was the 'true reason' for her dismissal as there is insufficient evidence to prove that [the employer] was aware of the pregnancy at the time of the redundancy."
The worker had not informed the directors of her pregnancy at the time of dismissal, though she acknowledged there were rumours. The FWC also found no evidence supporting the worker's claim that she was dismissed for making a complaint against another employee, describing her evidence as "a litany of complaints about that employee's behaviour, without explaining how that led [the employer] to decide to dismiss her."
The FWC concluded that the employer failed to meet consultation requirements, making the redundancy non-genuine. The decision stated: "I find that [the employer] did not comply with its consultation obligations under the Award. Therefore, in accordance with s.389, [the worker's] redundancy was not a genuine redundancy."
The FWC then assessed whether the dismissal was harsh, unjust or unreasonable under section 387 of the Fair Work Act. It identified several factors weighing in favour of finding unfairness. The worker was pregnant at dismissal, had recently given birth, remained unemployed, and was the primary household earner. The sudden nature of the termination also weighed against the employer.
The FWC ordered compensation rather than reinstatement, considering the worker's concerns about returning to work alongside another employee against whom she had made complaints. It applied the four-step compensation assessment process established in employment law, focusing on what would have happened if proper consultation had occurred.
The worker requested 26 weeks' wages, but the FWC took a measured approach. It found that proper consultation would have extended the worker's employment by at least two weeks, noting: "Had the consultation requirements been complied with, including a notice of the change and a consultation to discuss options other than redundancy, I am satisfied that [the worker] would have remained employed with [the employer] for another two weeks."
Based on weekly pay of $1,153.85 gross plus superannuation, the FWC ordered the employer to pay $2,307.70 gross plus superannuation within 21 days. The FWC concluded: "I find that the dismissal was harsh and unreasonable. Although there were legitimate changes in operational requirements which required [the employer] to downsize its operations, [the worker] was not afforded an opportunity to engage in discussions with management about options other than redundancy."
