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Redundancy and a 'fair go all round'

Excerpts from this article first published in ‘Human Resources’ Magazine, Issue 75, 8 March 2005

A Full Bench of the Australian Industrial Relations Commission in Paper Australia Pty Limited v. Stephen Day [PR954801] has overturned a decision by Commissioner Cribb to award a redundant Administration Manager $32,000 in compensation for unfairness arising from his termination.

Before Paper Australia made Mr Day redundant without warning, they considered him for a number of alternative positions but, never discussed these positions with Mr Day. Nor did the company provide Mr Day an opportunity to state a case for why he should be considered.

In October 2004 Commissioner Cribb determined that Paper Australia had valid reasons for terminating Mr Day's employment, however, had denied Mr Day procedural fairness in effecting his termination. It was the Commission's view that as Paper Australia considered Mr Day unsuitable for alternative positions, his termination was a result of both organisational restructure and his ‘capacity’ as an employee.

Commissioner Cribb held that Mr Day should have been provided an opportunity to respond to his employer’s assessment of his capacity. The failure to provide Mr Day with the opportunity to respond, resulted in a denial of procedural fairness. Commissioner Cribb also concluded that Paper Australia’s failure to provide any warning of the redundancy again resulted in procedural unfairness.

Paper Australia appealed Commissioner Cribb’s decision. On appeal, the Full Bench was of the view that the termination was as a result of an operational restructure only and was unrelated to Mr Day’s capacity as an employee.

The Full Bench also found that Paper Australia was justified in not giving Mr Day prior warning about his redundancy, given the company’s legitimate concern that prior warning may have resulted in damage to confidential information. It was also the view of the Full Bench that if Paper Australia had provided Mr Day with an opportunity to state his case for his suitability for alternative positions, it was unlikely that he would have been selected.

HR Tip

Employees who are made redundant may still access remedies under unfair dismissal laws. When making employees redundant employers should, warn employees of the pending redundancies, when circumstances permit. Where only some employees are to be made redundant, it is important that an objective selective criteria be applied. If alternative positions are available, employees should be given the opportunity to state their case for why they should be considered for the alternative positions.

Jason Donnelly

Senior Associate

Australian Business Lawyers