Employer’s Redundancy Assumption goes awry in Dismissal Case

In Brief

In a recent appeal case about a redundancy1, Fair Work Australia (“FWA”) rejected an employer’s “assumption” that a manager would be insulted if offered redeployment to a more junior position following a restructure.

What does the Fair Work Act say about redundancy?

The Fair Work Act sets out a number of requirements in order for a dismissal to be considered unfair. One such requirement is that the dismissal must not be a case of “genuine redundancy”.

If an unfair dismissal claim is lodged but FWA finds that the dismissal was because of a “genuine redundancy”, it will bring the claim to an end.

A dismissal will not have been a genuine redundancy, if it would have been “reasonable” in all the circumstances for the employee to have been redeployed within the employer’s enterprise (or an entity associated with the employer’s enterprise).

The Jenny Craig dismissal case

In 2011, Jenny Craig Weight Loss Centres (“Jenny Craig”) restructured its operations resulting in a female manager’s redundancy and dismissal.

Prior to the redundancy, the woman was employed as a Regional Manager. The employee’s position involved significant responsibility including hiring and firing staff, as well as the strategic direction and revenue growth of Jenny Craig centres within her region.

The employee challenged her dismissal by lodging an unfair dismissal claim with Fair Work Australia.

Under the Microscope – The Employer’s Actions

During the appeal hearing, it emerged that:

• The possibility of redeployment was never discussed with the employee
• There were a number of more junior management positions vacant at the time (although of lesser responsibility and pay) including that of “Centre Leader”
• The employee had the necessary skills, qualifications and experience for a Centre Leader position
• If offered, the employee would have accepted a Centre Leader position
• No alternative position was offered to the employee

An excuse put forward by the employer for failing to offer redeployment was that an offer of a lesser position, it had assumed, would be taken as a “complete insult” by the employee concerned.

The Decision

FWA held that the dismissal was not a case of a “genuine redundancy” because redeployment to a Centre Leader position would have been reasonable in all the circumstances.

Factors taken into account by FWA included that:

• There had been an option of redeployment to a centre leader position
• The employee had the necessary skills, qualifications and experience for that position
• There was no reason to disbelieve the employee’s evidence that she would have accepted the position if it were offered

Lessons for Employers

Employers should:

1. If considering a restructure, be mindful of the Fair Work Act’s “genuine redundancy” requirement
2. If redeployment is available but to a lesser position – never assume that an employee will reject redeployment
3. Whether an employee may be “insulted” by a particular offer of redeployment is not a valid reason for failing to discuss redeployment with the employee
4. If in doubt about whether an employee has the relevant skills, qualifications and experience for a particular vacancy – discuss those concerns with the employee and seek his/her feedback

1 Jenny Craig Weight Loss Centres Pty Ltd v I Margolina [2011] FWAFB 9137 (23 December 2011)