A recent matter in the Fair Work Commission (FWC) has placed the spotlight on employers to ensure that are complying with all procedural and meaningful aspects of redundancy. Employers with domestic and international associated entities, who are implementing redundancies in Australia, now need to consider reasonable redeployment options to affected employees.
The case of Alesia Khliustova v Isoton Pty Ltd  FWC 658, highlights that employers cannot simply just tick the boxes regarding consultation and redeployment during the redundancy process. Commissioner Platt stressed the importance of making a genuine effort to engage with and consult with the employee regarding their redundancy as well as consider reasonable redeployment opportunities especially those in overseas associated entities.
Alesia Khliustova, a software engineer, found herself facing redundancy when her employer, decided to restructure their operations. However, Ms Khliustova claimed that her employer had failed to comply with the consultation and redeployment requirements outlined in the Fair Work Act 2009 (Act). As a result, she brought her case before the FWC, seeking remedies for unfair dismissal.
Section 389 of the Act provides that a “genuine redundancy” occurs if:
- the person’s employer no longer requires the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise.
- the employer has complied with any obligation to consult with employees about the redundancy contained in a modern award or enterprise agreement; and
- an employer has considered any alternate position for potential redeployment within the employer’s enterprise, or enterprise of an associated entity of the employer.
Whilst it was found that the employer did indeed have operational requirements requiring redundancy, it was held that proper consultation in accordance with the requirements under the applicable modern award and suitable redeployment was not afforded.
Under the Act and other industrial instruments, employers are often obligated to consult with affected employees regarding major workplace change, including redundancy. The consultation process must be undertaken in good faith, allowing sufficient time for meaningful discussions and consideration of alternative measures. Failure to meet these obligations can result in legal repercussions.
The decision in this case underscores the importance of consultation during redundancy and highlighted that it is not merely a procedural requirement. The FWC described the consultation in this case as “at best a perfunctory exercise.”
Consultation plays a vital role in ensuring fairness and providing employees with an opportunity to participate in the decision-making process. It allows employees to;
- understand the reasons behind the proposed changes;
- explore alternative options; and
- provide input that may mitigate the impact of redundancies.
Additionally, employers have a duty to explore redeployment opportunities within their enterprise or an associated entity. The Act states that redundancy can only be deemed genuine if it would not have been reasonable in the circumstances for the employee to be redeployed within the employer’s enterprise or an associated entity.
In this case, the employer failed to meet this obligation to provide redeployment in an overseas associated entity. Despite restructuring and recruiting for positions within its associated entity in India, the employer did not offer Ms Khliustova any of these roles. The employer had presumed that Ms Khliustova would not have accepted the role due to its location and lower remuneration. However, the FWC found that if the employer had properly consulted with Ms Khliustova, they may have discovered her willingness to travel, work in different cultures, and even accept lower wages for the experience. The FWC stated that it was ‘dangerous’ for employers with redeployment options to fetter offers based on their own prejudices.
Remedies for Breach of Consultation and Redeployment Obligations
This case serves as a reminder to all employers that ignoring or inadequately fulfilling their consultation and redeployment obligations can have significant repercussions. This can include financial implications and damage to the employer’s reputation.
What steps should employers be taking?
To reduce legal risk, all employers should be taking the following steps when implementing redundancies in Australia. This includes:
- conducting meaningful consultations with employees facing redundancy; and
- actively exploring redeployment options within their enterprise or associated entities.
These steps are not only a legal requirement, but a fundamental principle of fairness and respect in the workplace.
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To view the full decision, visit: http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FWC/2023/658.html