Redundancy risks – two cautionary tales for employers

Employers seeking to restructure their businesses, particularly in an increasingly complex financial and operational landscape, should take care not to overlook their employment obligations.

In this article, we discuss two recent court decisions that demonstrate some of the consequences of getting it wrong.

Qantas Airways Limited v Transport Workers Union of Australia¹ – is your restructure for a prohibited reason?

In this case, the High Court of Australia held that Qantas took unlawful adverse action against its former ground handling employees when it outsourced their jobs to contracted third-party suppliers.

At the time the outsourcing decision was made, many of the affected employees were members of the Transport Workers’ Union of Australia and covered by an enterprise agreement which was soon due to be renegotiated. Because the enterprise agreement had not yet reached its nominal expiry date, the employees were not yet entitled to engage in protected industrial action.

The general protections provisions in the Fair Work Act 2009 (Cth) (FW Act) provide, amongst other things, that employers must not take adverse action against employees to prevent the exercise of their workplace rights. A key issue to be determined before the High Court was whether the general protections provisions only operated where a workplace right was presently in existence at the time adverse action was taken, i.e. whether the Qantas employees were protected from adverse action in circumstances where they did not yet have the right to engage in protected industrial action.

The High Court unanimously held that it would be unlawful for an employer to take adverse action to prevent employees from exercising a workplace right they would have in the future – even if that workplace right did not presently exist.

This a significant decision for employers seeking to take advantage of a “window of opportunity” to potentially terminate – for example, employees in probation who are just shy of reaching the minimum employment period and becoming eligible to make unfair dismissal claims, or employees who are about to reach a long service leave milestone – because they will need to demonstrate that the termination was not taken for the substantive and operative reason of depriving employees of the opportunity to exercise future workplace rights.

Helensburgh Coal Pty Ltd v Bartley² – reconceptualising reasonable redeployment?

Employers have a jurisdictional objection to an unfair dismissal claim in cases where they can establish that the dismissal was a case of a ‘genuine redundancy’. A dismissal will be a genuine redundancy where:

• the employer no longer requires the job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and
• the employer has complied with any applicable consultation obligations in a relevant modern award or enterprise agreement.

However, a redundancy will not be a genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within the employer’s enterprise or the enterprise of an associated entity of the employer.

In Helensburgh Coal, the Full Federal Court confirmed that the dismissals of 22 employees working at the Helensburgh Mine were not cases of genuine redundancy because it would have been reasonable to redeploy the employees into positions which were at the time filled by employees of contractors engaged to perform other particular tasks at the mine.

This decision is significant as it confirms that when considering redeployment, employers should be undertaking a far-reaching analysis of measures that they could take to redeploy an otherwise redundant employee – and that the immediate unavailability of a position to which a redundant employee could have been redeployed will not necessarily render them immune from unfair dismissal claims.

Whilst the Full Court’s decision in Helensburgh Coal serves as a caution to employers to undertake careful analysis of alternatives that would allow the employment to remain on foot, it is also currently subject to a High Court challenge by the employer. In the appeal, the High Court has been asked to determine whether the Full Court wrongly interpreted the redeployment obligation under the FW Act as authorising the tribunal to determine whether an employer should have made alternative changes to its enterprise (including by terminating other operational or staffing arrangements) so as to make positions available to otherwise redundant employees.

Key takeaways

These two cases highlight the necessity of:

• having a strong business case for restructuring: noting that even where there is a commercial reason for restructuring, discharging the ‘reverse onus’ in general protections claims presents significant evidentiary challenges. Employers looking to restructure should ensure there is a justifiable business case and that any decision-makers are prepared to give evidence to that effect;
• taking redeployment obligations seriously: the obligation to consider redeployment is wide – it extends beyond providing a list of vacant opportunities or inviting employees to apply for a role. Employers should actively consider things it could do apart from dismissing employees, including:
  • roles which are not currently available but are about to become available, e.g. where other employees are soon to retire or where a contract with a third party for the performance of work is about to expire;
  • providing training to enable employees to fill an available role that they may be unqualified for without such training; and
  • whether any barriers that would make redeployment difficult would render redeployment to not be reasonable in all the circumstances.

Employers should stay alert for developments in this area of law over the coming months – particularly in relation to the High Court appeal of Helensburgh Coal.

Footnotes

1. [2023] HCA 27
2. [2024] FCAFC 45