Consultation obligations

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Introduction

See Fair Work Act 2009 s.389(1)(b)

The obligation on an employer to consult about redundancy only arises when a modern award or enterprise agreement applies to an employee and that modern award or enterprise agreement contains requirements (which they often do) to consult about redundancy.

When does a modern award apply?

See Fair Work Act s.47

A modern award applies to an employee when it:

covers the employee
is in operation, and
there is no provision in the Fair Work Act which provides or has the effect that the modern award does not apply.

A modern award does NOT apply to an employee at a time when the employee is a high income employee. As a result, modern award consultation obligations do not apply to high income employees.

This does not affect eligibility for an unfair dismissal remedy.

Related information

When does an enterprise agreement apply?

See Fair Work Act s.52

An enterprise agreement applies to an employee when it:

covers the employee
is in operation, and
there is no provision in the Fair Work Act which provides or has the effect that the modern award does not apply.

Related information

Application of an enterprise agreement

What if there is no modern award or enterprise agreement that applies?

There is no legislative requirement to consult about the redundancy before a decision is made to make an employee redundant.

The Fair Work Ombudsman can assist you with enquiries about the application of modern awards and enterprise agreements. For assistance, contact the Fair Work Ombudsman on 13 13 94 or www.fairwork.gov.au.

Consultation provisions

It will not be case of genuine redundancy if an employer does not comply with any relevant obligation in a modern award or enterprise agreement to consult about the redundancy. This does not impose an absolute obligation on an employer to consult about the redundancy but requires the employer to fulfil obligations under an award or agreement if the dismissal is to be considered a genuine redundancy.^[1]

If an employer was obliged to consult and fails to do so, there cannot be a genuine redundancy.^[2]

The process for selecting employees for redundancy is not relevant to whether the dismissal was a genuine redundancy or whether there was a valid reason for dismissal based on capacity. However an unlawful selection process may be relevant to a claim under the general protections provisions of the Fair Work Act or under state or federal anti-discrimination laws.^[3]

Criteria in s.389 of the Fair Work Act which have not been met, such as the requirement to consult, can be taken into account in the Fair Work Commission's consideration as to whether the dismissal was harsh, unjust or unreasonable as part of s.387(h) of the Fair Work Act, being 'any other matters that FWC considers relevant'.^[4]

A failure to consult with employees about redundancy can mean that the Commission may find that it was not a case of genuine redundancy.^[5] However, in circumstances where 'consultation was highly unlikely to have negated the operational reasons for the dismissal or lead to any other substantive change', the failure to consult may not be so strongly considered by the Commission in determining whether it was an unfair dismissal.^[6]

Consultation must be genuine and not perfunctory

Consultations should be meaningful and should be engaged in before an irreversible decision to terminate has been made.^[7]

'Consultation is not perfunctory advice on what is about to happen ... [c]onsultation is providing the individual, or other relevant persons, with a bona fide opportunity to influence the decision maker.'^[8]

'The purpose of a consultation clause is to facilitate change where that is necessary, but to do that in a humane way which also takes into account and derives benefit from an interchange between worker and manager.'^[9]

The following was observed by Sachs LJ in Sinfield v London Transport Executive:^[10]

Consultations can be of very real value in enabling points of view to be put forward which can be met by modifications of a scheme and sometimes even by its withdrawal. Any right to be consulted is something that is indeed valuable and should be implemented by giving those who have the right an opportunity to be heard at the formative stage of proposals – before the mind of the executive becomes unduly fixed.^[11]

Case examples

Consultation requirements met

Evidence of meetings and emails exchanged regarding redundancy

Patti v Vincent Chrisp & Partners P/L t/a Vincent Chrisp Architects [2012] FWA 8677 (Hamilton DP, 11 October 2012).

The employer experienced a reduction in business and consequently made a number of positions redundant. The employer met with the affected employees to discuss the need for redundancies and sent letters explaining the need for redundancies. The employee sought further information regarding the redundancy and requested recognition of an additional year of service. The employer provided all of the additional information sought by the employee and granted the additional year.

It was found that the consultation obligations were met by the employer.

Employee's role amalgamated – rejected a position offered

Purdon v The Ascent Group Australia Ltd t/a The Ascent Group [2012] FWA 2495 (Watson VP, 27 March 2012).

The employer had to consider redundancies after experiencing a large budget deficit. The employer communicated its intention to initiate redundancies to the employee on a number of occasions, including discussions regarding restructuring the departments which would result in merging the roles of 2 managers into 1. The employer invited input from the affected employees regarding the proposals. The employee was offered to be redeployed into another position as a Manager, however the employee rejected this offer. It was held that the employer met their consultation obligations.

Evidence in writing of changes, meeting called – employee refused to co-operate

Lindsay v Department of Finance and Deregulation [2011] FWA 4078 (Williams C, 14 July 2011).

Employer notified employees of proposed redundancies in writing and then met with the employees to discuss the changes. The meeting with the applicant was brief due to the hostility the she showed towards the employer. However meetings held with the other employees involved an extended discussion about the proposed redundancies. It was held that consultation with the employee was truncated as a result of her attitude and actions, rather than by any refusal by the employer to consult. The consultation obligations in the modern award were satisfied.

Note: The dismissal was found not to be a genuine redundancy because it would have been reasonable for the employee to be redeployed.

Employer did not follow all of the requirements of the consultation clause, such as putting proposals in writing

Tyszka v Sun Health Foods Pty Ltd [2010] FWA 1781 (Foggo C, 19 March 2010).

The employer made 16 positions redundant. The employer consulted with the union and had meetings with affected employees, to discuss the need for redundancies. The union also held meetings with the employees to discuss the changes. Although the employer did not follow the requirement to consult in writing, it was found that, in totality, the employer complied with the requirement to consult.

Consultation requirements NOT met

Employee on annual leave during consultation

UES (Int'l) Pty Ltd v Harvey [2012] FWAFB 5241 (Acton SDP, Kaufman SDP, Bissett C, 14 August 2012), [(2012) 215 IR 263].

A warehouse manager's position was selected for redundancy due to a decline in business. However, it was found that the employer failed to properly consult with the employee regarding the termination of his employment. The failure to consult was the only reason the dismissal was not found to be a genuine redundancy and the termination of the employee's employment was found to be unfair, notwithstanding the fact that there was a valid reason for the dismissal.

Meeting took place after the decision to make employee redundant

Monks v John Holland Group Pty Ltd [2012] FWA 6453 (Gooley C, 1 August 2012).

The employer did not consult with the employee regarding the decision to make her position redundant until after a definite decision had been made about the redundancy, and about the creation of a new position and who would fill it. The employee had no opportunity to convince her employer she could fill the new position.

Note: Although it was found that the dismissal was not a case of genuine redundancy, it found that the employee declining the employer's offer to remain employed while looking at redeployment options was a valid reason to terminate the employee's employment. Therefore the dismissal was not harsh, unjust or unreasonable and the employee's application was dismissed.

Employees made redundant with no opportunity for input

Wang v Specialty Fashion Group Ltd [2011] FWA 6872 (Watson VP, 20 October 2011), [(2011) 213 IR 203].

After the employer decided to make positions redundant, the employer held one-on-one meetings with the employees to discuss the redundancies. However, the employees had no input into issues such as who was selected, redeployment, payments and alternatives to redundancy. It was held that the dismissal was not a genuine redundancy.

Employer merged employee's position, advertised position and hired someone else before making employee's position redundant

Maswan v Escada Textilvertrieb t/a ESCADA [2011] FWA 4239 (Watson VP, 8 July 2011).

The employer had been experiencing financial difficulties and decided to restructure their operations. The employer failed to notify and consult with the employee in accordance with the award.

Note: Although the termination was not a case of genuine redundancy due to a failure to consult, it was found that the same conclusion would likely have been reached whether or not there was a failure to consult. Therefore, the dismissal was not unfair.

Employer issued notice of a downturn and requested employees take leave

Kaysal v DBM Handrails Pty Ltd [2010] FWA 8426 (Blair C, 3 October 2010).

The employer issued a notice advising employees of a considerable reduction in available work and therefore a need to reduce staff numbers. It was found that the notice did not constitute adequate consultation.

Employer claimed discussing warehouse closure with employee via telephone

Chamia v Quikfund Australia [2012] FWA 7637 (Macdonald C, 13 June 2012).

The employer claimed that the employee had been advised of the closure of the warehouse in which she worked. It was found that even if the alleged telephone conversation occurred, the employer did not inform the employee that her role would no longer exist.

As the employee was neither given an opportunity to influence the decision, nor was she considered for redeployment into another role, it was found that consultation did not occur and the dismissal was not a case of genuine redundancy.

References

^[1] Explanatory Memorandum to Fair Work Bill 2008 at para. 1550.

^[2] See for example UES (Int'l) Pty Ltd v Harvey [2012] FWAFB 5241 (Acton SDP, Kaufman SDP, Bissett C, 14 August 2012), [(2012) 215 IR 263].

^[3] UES (Int'l) Pty Ltd v Harvey [2012] FWAFB 5241 (Acton SDP, Kaufman SDP, Bissett C, 14 August 2012) at paras 26–27, [(2012) 215 IR 263].

^[4] ibid.

^[5] ibid., at paras 47‒48.

^[6] See Maswan v Escada Textilvertrieb T/A ESCADA [2011] FWA 4239 (Watson VP, 8 July 2011) at para. 39.

^[7] Construction, Forestry, Mining and Energy Union v Newcastle Wallsend Coal Company, Print R0234 (AIRCFB, Ross VP, MacBean SDP, Deegan C, 21 December 1998) at paras 78–80, [(1998) 88 IR 202]; cited in Steele v Ennesty Energy Pty Ltd T/A Ennesty Energy [2012] FWA 4917 (Jones C, 21 June 2012) at para. 20.

^[8] Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Vodafone Network Pty Ltd, PR911257 (AIRC, Smith C, 14 November 2001) at para. 25.

^[9] Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v QR Ltd (No 2) [2010] FCA 652 (22 June 2010) at para. 49.

^[10] Sinfield v London Transport Executive [1970] Ch 550.

^[11] ibid., 558.

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16 March 2021

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