Court decision

Redundancies up for double scrutiny

By Anna Hendry and Adele Garnett / 01 June 2021
5 min.
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Worthwhile read for: Employers, HR professionals

Employers considering making a worker redundant are usually aware that their actions might come under scrutiny in an unfair dismissal claim. What many employers don’t consider is that the reasonableness of the redundancy and the way in which it is undertaken may also come up for consideration by the Queensland Industrial Relations Commission (the Commission) should the worker make an application for compensation for psychiatric injury arising out of the redundancy and the question of reasonableness in this forum is not so black and white. 

In this article, Partner, Anna Hendry and Senior Associate, Adele Garnett consider the approach of the Commission to the reasonableness of a redundancy in the decision of Scott v Workers' Compensation Regulator [2021] QIRC 110 and the practical points employers can take away. 

Background

The worker had been employed with the employer since 2003, and in 2010 had been promoted to a supervisor role. In 2017 and 2018 he required time off work due to a medical condition unrelated to his work. During that time, he was concerned about his job security but had received correspondence from the employer that had put his mind at ease in this regard. Shortly after his return to work, he was called into a meeting with management where he was advised that his position had been made redundant immediately. He suffered a major depressive disorder as a result of the redundancy. His access to damages turned on whether his injury was excluded from the definition of injury by the operation of s32(5) of the Workers’ Compensation and Rehabilitation Act 2003 (Qld). Namely, whether the termination of his employment on 7 August 2018 constituted "reasonable management action taken in a reasonable way".

Decision

The Commission’s focus in considering the reasonableness of the management action was on the employer’s failure to consult with workers before the redundancy decision was made. After an analysis of the basis of the worker’s employment, the Commission determined that he was covered by the relevant enterprise bargaining agreement (EBA). This imposed a “consultative mechanism” in relation to matters raised by the employer and designed to increase productivity, efficiency and competitiveness of the business, which plainly included the budget-based decision to make the worker redundant. However, the Commission also found that even absent a requirement for consultation, there might be circumstances particular to a specific worker that make a failure to consult unreasonable. In this case, the Commission found that the worker’s length of service, earlier concerns about job security in the context of ongoing absence due to illness, the long-term illness itself and the worker’s supervisory role, meant that a failure to consult ahead of the redundancy was unreasonable management action. 

In finding that the redundancy process was not undertaken reasonably, the Commission noted that the lack of consultation meant that the redundancy was a “complete shock”, the worker was not notified of the purpose of the meeting in advance and was not afforded the opportunity to have a support person at the meeting. The Commission specifically found that the failure to have a support person was more than a “mere blemish” on the conduct of the meeting. 

Takeaway points

  • If the relevant EBA or modern award requires consultation ahead of redundancy, it is unreasonable management action to fail to genuinely consult. A failure to consult may also lead to a successful unfair dismissal claim in some circumstances. Read our previous article Redundancy - Process and Payments - Getting it right for more information. 
  • As per our previous article, genuine consultation involves both extending to affected workers an opportunity to be heard and an entitlement to have their view considered when a final decision is made . The relevant EBA or modern award must guide this consultation process and usually has requirements such as providing information to the employee in writing, discussing the effect of the change on the employee, and discussing measures to avoid the impact of the change on the employee.
  • Even if there is no requirement under an industrial instrument to consult ahead of a redundancy termination, there may be circumstances specific to the relevant worker which indicate that consultation should occur. 
  • The worker ought to be given a general idea of the purpose of the meeting such that it is not a shock to them.  
  • The worker ought to be offered the opportunity to have a support person present at a meeting, particularly if the meeting is to discuss the possible termination of their employment. See our previous article on this topic.  

Redundancy consultation can be complicated and is usually undertaken at a time of stress for the business. If you would like further assistance on possible redundancies and consultation within the workplace, please contact our Workplace and Employment team.
 

Authors
Anna Hendry
Partner
Anna is a Partner who advises exclusively in insurance litigation, acting on behalf of major public liability insurers, workers’ compensation insurers and self-insurers, compulsory third party insurers and professional indemnity insurers.
Adele Garnett
Senior Associate
Adele is a Senior Associate in our Workplace and Employment practice.

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