Three former employees of the Bananacoast Credit Union, who were made redundant only to learn a month later that others had been hired to fulfil similar duties, have won the right to appeal their dismissals.
A full bench of Fair Work Australia found that events which occurred after Rodney Cross, Karin Thompson and Denis Payne were made redundant could have a bearing on whether the redundancies constituted unfair dismissals.
The trio – who had been employed by BCU for 13, 12 and three years respectively – were made redundant in April this year because of financial reasons and a company restructure. None of them disputed the reasons at the time.
However, over the course of the following month, the employees learned that the credit union had hired others to perform what they believed were similar or identical duties.
Through the Finance Sector Union they decided to pursue an unfair dismissal action, despite being outside the 14-day statutory time limit imposed by the Fair Work Act.
At an initial Fair Work Australia hearing in September, the union representing the trio argued that they weren’t genuinely consulted about the business restructure, and that they would have submitted claims immediately if they had known other staff were coming into the organisation.
The BCU claimed the workers were consulted and that the new roles were different vacancies that existed before the business restructure.
At the September hearing, Deputy President Sams declared the case to be “rare and unusual” and rejected any argument that the dismissals could not be unfair “based on matters that occur after the dismissal took effect”. He ruled that the unfair dismissal claims could be lodged.
This decision was affirmed by the full bench of Fair Work Australia last week, which upheld the original finding.
“The arguments of error are not strong and essentially amount to disagreement with the consideration of the factors required to be taken into account. We have not been satisfied that it is in the public interest to grant permission to appeal,” the full bench found.
Greg McConville, senior national industrial officer at the FSU, told SmartCompany the case sets an important precedent for all employers considering making redundancies and is particularly relevant where an employer makes someone redundant because they have identified someone else that they would prefer to employ.
“The concern for us was that positions were filled at or around the time or after employees were made redundant. Whilst employees are often happy to get a redundancy payment, in many cases they would prefer to keep their job, particularly in regional economies where employment opportunities are limited, and that is the case here,” he says.
McConville says the new positions were “similar enough” for the union to say these people should reasonably have been given an opportunity to be redeployed to this job.
“What’s significant about this is it is the first decision in which the tribunal has recognised that things that have happened after a termination might have bearing on the fairness of the termination,” he says.
McConville says the case raises an issue for any employer that if employees are to be made redundant you must give them an opportunity to be redeployed and you subsequently hiring someone to do the job will be under scrutiny.
“It sends a warning to anyone who wants to use redundancy provisions as a way of contriving to get rid of someone they simply don’t like,” he says.
McConville said the three redundant workers are happy with the result.
“They are very pleased that now they can have their cases heard on merit…they don’t have their jobs back but there can be an argument about whether the redundancy was an unfair dismissal,” he says.
Victorian Employers Chamber of Commerce and Industry workplace relations manager Alexandra Marriott says the case means that what an employer does after someone’s employment is terminated might be relevant and have a bearing on whether the termination was fair.
“As part of a decision to make roles redundant, a really strong business case needs to be made and an employer needs to undertake some level of forecasting; and if the business case shows a slightly different role may be created down the track it would be reasonable to expect those people in a similar role would be redeployed to that role,” she says.
“Certainly that is a requirement of the Fair Work Act now so employers need to be cautious in ensuring a redundancy is absolutely genuine to make sure they are protected against employees bringing a claim such as an unfair dismissal claim.”
Marriott says Fair Work Australia has not yet made a decision about whether the redundancies constituted unfair dismissal; it has only allowed the claim to proceed to conciliation.
“However, we would recommend that businesses seek advice when dealing with something as complex as a redundancy as it does raise a range of obligations under the Fair Work Act,” she says.
SmartCompany contacted Bananacoast Credit Union but it declined to comment.
Cara Waters is a former SmartCompany editor. Previously, Cara was a senior reporter for the Financial Times’ website and worked for The Sunday Times in London.
