In an important recent decision, a Full Bench of the Fair Work Commission found that, before dismissing employees whose positions had become redundant, the employer should have considered the potential for voluntary job swaps between those employees and other employees in similar roles. By failing to do so, the employer did not comply with its obligations necessary for establishing genuine redundancies under section 389 of the Fair Work Act 2009 (Cth) (Act).

That outcome can lead, in the case of a worker protected from unfair dismissal, to a finding that, despite the redundancy of their position, the employee's dismissal on redundancy grounds was unfair.

The decision of Skinner v Asciano Services Pty Ltd T/A Pacific National Bulk [2017] FWCFB 574 delivers a strong warning to other employers to consider all redeployment possibilities, including voluntary job swaps, before terminating an employee's employment by reason of redundancy.

The factual background

Due to a reduction in workload brought about by reduced export grain demand, client loss and the closure of a key site, Pacific National's rail operational requirements changed in its bulk haulage division. As a result, Pacific National Bulk (PNB) commenced a process of labour rationalisation and made numerous positions redundant, both voluntarily and forced.

PNB had followed a redeployment process for the affected employees. Specifically, for the employees whose employment was to be involuntarily terminated on redundancy grounds, PNB held consultation meetings and had advised of internal transfer opportunities that were available. PNB invited each of the employees to indicate their interest in the available roles.

The original decision

There were challenges to this process. In May 2016 the Commission heard unfair dismissal applications made by nine of PNB's former employees who had been employed as train drivers but were then dismissed on redundancy grounds from July 2015 to August 2015.

Notwithstanding the redeployment process, the employees argued that their redundancies were not genuine for the purposes of section 389 of the Act. At first instance, the Commission was satisfied that there was a genuine redundancy for each of the nine employees, and that it was not reasonable for PNB to redeploy the employees.

The appeal

Seven of the employees appealed against that decision. The appeal was successful, having raised important questions about the application of section 389.

There were ten grounds of appeal. The employees primarily argued that PNB had failed to comply with its redeployment obligations under section 389(2) of the Act.

Section 389(2) states that a person's dismissal will not be a case of genuine redundancy if it would have been reasonable in all of the circumstances for the person to be redeployed within the employer's enterprise or an associated entity's enterprise.

One of the appeal grounds was that PNB did not consider the possibility of "swaps" with employees in other locations of PNB's operations.

The Full Bench overturned the first instance decision, and found that PNB breached its statutory obligation to explore redeployment options, by its failure to consider the possibility of job swaps.

The Full Bench indicated that whilst there is no obligation for an employer to implement job swaps, it should consider whether it is a reasonable option in the circumstances. It will always depend on the facts of the particular case as to whether it would be reasonable in the circumstances to allow employees, whose positions are to be made redundant, to swap positions with other employees who have expressed interest in voluntary redundancy.

The criteria

The following five factors led the bench to conclude that PNB should have considered voluntary job swaps when consulting with the affected employees:

  • PNB was a large business which employed a considerable number of employees who undertook the same role as those employees whose positions were becoming redundant.
  • There were a number of employees who performed the same role, or substantially the same role, of train driving which meant that PNB would not face onerous training requirements in allowing a swap.
  • Potentially there were swaps available in depots that were reasonably close to the depots in which some of the affected employees worked. This meant that PNB would not have been exposed to the costs associated with the transfer of those employees.
  • PNB had already canvassed job swapping as a possibility to mitigate the effects in the round of redundancies which resulted in the employees' dismissal.
  • PNB had previously allowed swaps in similar circumstances.

The key message

Before terminating for redundancy, employers should consult with employees as to all possible options for redeployment, including as to whether the employee can swap his or her position with that of another employee who wishes to be considered for voluntary redundancy.

This step might be critical, particularly in larger organisations where the type of work, and location for work, for affected employees would make it possible to arrange for a swap.

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