Management under fire for flawed consultation process in unfair redundancy case

Executives consulted amongst themselves, but didn’t approach worker directly

Management under fire for flawed consultation process in unfair redundancy case

The Fair Work Commission (FWC) recently dealt with an unfair dismissal case involving a finance data analyst who was made redundant by a not-for-profit organisation. 

The case highlighted important issues around genuine redundancy, consultation requirements, and the factors considered in determining unfair dismissal.

The case centred on the employee who was dismissed in November 2023 after just over a year of employment. The employer had over 800 employees and claimed the dismissal was due to a genuine redundancy following operational changes and restructuring of the data analytics team.

The worker was initially employed as a finance data analyst in June 2022. Shortly after, his role was relocated to the Business Intelligence department. The employer's Chief Information Officer (CIO) reviewed the structure and performance of the Data, Analytics and Reporting Team in July 2023, leading to a decision to restructure the team.

The restructure involved making the worker’s role redundant and creating new positions, including a senior data analyst role with additional responsibilities and technical requirements.

Employer’s consultation requirements

According to records, the applicable enterprise agreement required the employer to inform affected employees "as soon as reasonably practicable" after deciding to take action likely to significantly affect them. 

It also mandated discussion of the likely effects and measures to minimise adverse impacts. Critically, the FWC found the employer failed to meet these consultation obligations. The Commissioner stated:

“The point of the [employer’s] consultation requirements is to give affected employees the opportunity to be engaged in the process and have some buy-in over processes and decisions that may affect them significantly once there has been a decision to take action or introduce major change.” 

“Consultation is not merely telling an employee that they have been made redundant several months after a decision has been made to restructure their team,” the FWC added.

This finding emphasised that consultation should occur early in the change process, not just when final redundancy decisions are made.

Genuine redundancy defence fails

While the FWC accepted there were legitimate operational reasons for the restructure, the failure to properly consult meant the employer could not rely on the genuine redundancy defence.

The evidence showed that the employer had decided to review and restructure the team as early as June 2023 but did not inform the worker until October 2023. 

The CIO had consulted with other leaders and managers about the restructure but did not speak directly with the affected worker.

Unfair dismissal and compensation

After considering all relevant factors, the FWC ultimately found the dismissal was unfair due to the lack of consultation. The Commissioner stated:

"Considering all the factors in s 387, I find that the failure to consult [the worker] makes the decision to dismiss him unreasonable. I am therefore satisfied that [he] was unfairly dismissed."

As a remedy, the worker was awarded compensation of $7,452 gross, reflecting an estimated three additional weeks of employment had proper consultation occurred. 

The FWC explained:

"Had [the employer] complied with the consultation requirements in the [enterprise] agreement, I estimate that [he] would have remained in employment for a further three weeks."

This case serves as an important reminder for employers to start consultation early when planning organisational changes that may affect employees. The FWC also reminded companies to ensure affected employees have genuine opportunities to provide input before final decisions are made.

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