A recent decision of the Fair Work Commission, Mr Peter Gourdeas v Heyday 5 Pty Ltd[1] has confirmed that an employer must consult with ‘affected employees’ as required by an enterprise agreement or award that is binding on the employees and employer.

 

Under the Electrical,  Electronic and Communications Contracting Award 2020 (the Electrical Contracting Award) and most enterprise agreements, consultation with an affected employee must take place before a final decision is made.  An affected employee is one who may be significantly affected (which includes being made redundant) because his or her employer has made a definite decision to introduce major change such as the elimination of a position occupied by an employee.

 

The Electrical Contracting Award and enterprise agreements that contain the Fair Work Act’s model consultation term[2] or something no less beneficial to the employee requires the employer to notify the affected employee and their representative, if any, about the change and its likely effects as soon as practicable after the employer has made the definite decision.  The employer is also required to inform the employee and the representative about measures taken to avert or mitigate any adverse effects.

 

Consultation must afford the employee the opportunity to raise matters that may influence the employer’s final decision.  The employer must consider and respond to any such matters raised by the employee.

 

Background

The background to the case before the Commission was that Heyday 5 (the employer) was compelled to make some of its electrician’s redundant because of a downturn in work.   One of the employees selected for redundancy, Mr Gourdeas (the employee) made an unfair dismissal application to the Fair Work Commission.  NECA represented the employer in the case.

 

The Fair Work Commission accepted that the employer had a valid reason to make the employee redundant.  His job no longer existed and he could not be re-deployed to another position that was available.

 

The Commission did not accept that the employee’s dismissal was a case of ‘genuine redundancy’[3] because the employer failed to consult with the employee as required by the enterprise agreement that covered his employment.   The Commission went on to find that the employee’s dismissal was therefore unfair and awarded him an additional three week’s pay as compensation.

 

At the time of his termination, the employee had been employed as a licensed electrician for a little over seven months, most recently on a project in the Sydney CBD.  On 17 April he was called to a meeting with his supervisors at which he was informed that he was being ‘let go’ because of a downturn in work.  The employee was one of a number selected for redundancy. The employer had already made a number of employees redundant from various sites and continued to make more employees redundant in the months following the employee’s termination.

 

In evidence before the Commission, it emerged that the employee was chosen for redundancy while other electricians were retained because of his relevantly short service and because of an adverse assessment conducted in January.   The employee had disputed the assessment in an email to his supervisor but there was no follow up meeting with the employee to discuss his concerns.

The Commission was satisfied that the only ‘consultation’ with the employee occurred after the decision to terminate his employment because of redundancy had been made.  The Commission quoted a passage from the earlier Termination Change and Redundancy test case decision[4]

 “The requirement to discuss proposed changes and consult about the changes has been held to require meaningful consultation and not merely an afterthought. Consultation after an irrevocable decision has been made has been held to not amount to meaningful consultation.”

 

Employees who are not covered by an Award or Enterprise Agreement

The Fair Work Act does not require an employer to consult with an employee not covered by an award or enterprise agreement.

 

However, such an employee could make a number of claims about his or her dismissal such as the position formerly occupied by him or her was not redundant as the employee had been replaced in that position or that the employee was selected for redundancy for a prohibited reason such as the employee exercised or sought to exercise a ‘workplace right’[5]  or because of the employee’s age, sex, race, physical or mental disability, or other discriminatory reason.

 

It is good practice, therefore, to consult with award and agreement free employees who are being considered for redundancy so that the employer can demonstrate, if it becomes necessary to do so, that the employee was terminated because his or her position genuinely no longer existed and the reason he or she was selected for redundancy was not a prohibited reason.

 

Conclusion

Employers need to comply with the consultation obligations set out in the relevant award or enterprise agreement. Under the Electrical Award and most enterprise agreements those obligations include:

  • Notifying affected employees about the proposed redundancies before the decision to make any of them redundant is made;
  • Allowing the employee to have a representative if he or she requests one;
  • Advising the employee (and their representative) of steps taken by the employer to avert or mitigate the effects of the changes being made to the employer’s business because of operational requirements;
  • Providing relevant information in writing;
  • Genuinely considering any proposals made by the employee or their representative;

The employer should keep a written record of discussions held with the employees and their representatives.

 

Members can seek NECA’s advice when faced with the prospect of making employees redundant. Contact CTI Lawyers on 1300 361 099 or email law.clerk@neca.asn.au

 

[1] [2020] FWC 6132

[2] See Fair Work Regulations Schedule 2.3

[3] An employee who has been dismissed because of a ‘genuine redundancy’ as defined by section 389 of the Fair Work Act cannot pursue an unfair dismissal claim.

[4] (1984) 8 IR 34; (1984) 9 IR 115

[5] Fair Work Act section 341