Join our

mailing list.

Keep up to date with our latest insights.

Perspective

Determining whether a redundancy was genuine, in a rapidly-changing business environment

Redundancy genuine if no suitable alternative employment as at date of termination

United Petroleum underwent a restructure of its retail management team to mitigate the significant drops to its sales suffered as a result of COVID-19. As part of this restructure, the role of its Retail Store Specialist (Mr Lakhan), was made redundant. There were no suitable alternative redeployment opportunities available at the time of the redundancy.

A little over two weeks later, United Petroleum advertised for a Retail Operations Specialist. The description was akin to Mr Lakhan’s former role.

United Petroleum revealed during the hearing this advertisement was uploaded in error by a “clearly incompetent” person in HR, who had been asked to remove it. At the time of the hearing, the advertisement had not been removed.

A further week later, United Petroleum advertised for a Retail Trainer. Mr Lakhan grew suspicious and applied for this role using his son’s name. His son was offered an interview for the Retail Operations Specialist role (despite the above). Mr Lakhan did not attend the interview.

By this stage, COVID-19 restrictions had eased, and the financial position of the company improved significantly, and United Petroleum offered to re-employ Mr Lakhan in a new role of Retail Site Re-Set Officer. Mr Lakhan did not accept the offer.

The Fair Work Commission held the redundancy was genuine at the time of termination. In reaching this decision, the Commission noted that United Petroleum’s business operations had changed in the short time between the termination and the advertisement for a Retail Trainer, requiring it to quickly adapt.

See Lakhan v United Petroleum [2020] FWC 4970

Lessons

  1. The Commission will consider whether there were any suitable alternative roles available at the time of termination, in determining whether a redundancy was genuine. So long as the employer can satisfy the Commission no such role was in contemplation at the time of termination, the redundancy will be classified as genuine and an unfair dismissal claim will not succeed. In this case, evidence that United Petroleum had assessed its operating environment and the changes to it was sufficient.
  2. Attention to detail is critical especially following a restructure involving redundancies. The Commission was very understanding of United Petroleum’s error in posting the wrong advertisement in reaching its decision. This will not always necessarily be the case.

Written by Nes Demir

Have a question or need advice?

Our team is here to provide the right advice for your business and workforce. If you have a question or require assistance, please contact Andrew Douglas.

Stay updated with our Friday Workplace Briefing

Every Friday at 10:30am, join us online to hear the critical news and developments that affect your workplace. We’ll keep it simple, pragmatic and to 30 minutes.

Share

Heightened levels of stress around the pandemic is also a relevant factor. An April 2020 study reported 88% of the participants (US employees) faced moderate to extreme stress during the pandemic and nearly 70% faced the most stressful time of their professional career.

Paul Evans

Managing Director, Toro Digital

Psychological hazards of e-working during the pandemic is a relevant factor. The Australian Psychological Society identified these hazards as conflicts between work and family, workload and over-working, future uncertainty and isolation/loneliness.

Heightened levels of stress around the pandemic is also a relevant factor. An April 2020 study reported 88% of the participants (US employees) faced moderate to extreme stress during the pandemic and nearly 70% faced the most stressful time of their professional career. Participants noted their productivity consequently declined by at least one hour a day for 62% and at least two hours for 32%.

Unsurprisingly, there has been a marked rise in mental health related prescriptions since March 2020.

These risks can be mitigated by undertaking appropriate risk analysis for each employee, ensuring controls are instituted that mitigate those risks, ensuring regular communication between management and employees around individual circumstances, setting clear expectations including around joint goals and objectives, scheduling regular informal team gatherings, and ensuring access to support and resources.

Share

KEY CONTACTS

Managing Principal and Director

Legal Solutions.

Found.

Anything we can help you with?

Fusce sed egestas massa. Praesent eu sem pulvinar, condimentum massa ut, finibus ante. Praesent congue magna quis lectus placerat, tincidunt pellentesque ex placerat. Quisque facilisis quam et augue rutrum, at laoreet purus bibendum.

Join our

mailing list.

Keep up to date with our latest insights.