Employment Lawyers NSW

Summary: If an employer is forced to make one or more employees redundant for a legitimate and valid reason, such as a downturn in business, the employer’s selection process by which they choose which employees are made redundant is now deemed to be irrelevant in determining the fairness of the dismissal.

A recent Decision of the Full Bench of Fair Work Australia [UES (Int’l) Pty Ltd v L.H. [2012] FWAFB 5241] has provided clarity on whether the selection process used to select employees for redundancy will affect the fairness of the termination.

Mr LH’s employment with UES was terminated in October 2011 by reason of redundancy. UES was experiencing a downturn in sales and made the decision to reduce its warehouse staff by one. Mr LH was selected due to his slowness in completing tasks relative to his warehouse colleagues.

Mr LH argued, amongst other things, that the decision to select him for redundancy based on his perceived slowness was not sound or well founded, and his dismissal was therefore unfair.

Mr LH relied upon: s 387(a) of the Fair Work Act which provides that when considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, FWA must take into account:

“whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees)”.

The Full Bench didn’t agree with Mr LH, with all three members finding that:

“whether there was a valid reason for the dismissal related to the person’s capacity or conduct does not go to the process for selecting the person for redundancy”.

The fact that there was an operational reason, being a downturn in sales, was held to be a valid reason for the dismissal.

However, the Full bench did find that UES had failed to consult with Mr LH as required by the relevant modern award, thus rendering the dismissal unfair and awarded him compensation equivalent to two weeks, being the period it would have taken UES to comply with its obligations to consult with Mr LH about the redundancy that led to his dismissal.

For any advice and assistance in these matters please contact our Employment Law Team.

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