Crane companies looking to restructure their business must be aware of the recent landmark High Court decision which broadened an employer’s redeployment obligations.
In August this year, the High Court found that the obligation to redeploy a potentially redundant employee is not confined to considering current vacant roles, but rather, an employer has a broad obligation to consider whether changes can be made to its current workforce to create or make available a position for an employee to avoid retrenchment.
To assist companies operating in the crane industry with managing redundancies going forward, in this article we explain why it is important for an employer to comprehensively meet its redeployment obligations, and unpack the High Court’s decision and its implications on workforce planning.
Redeployment obligation
At law, a redundancy is only considered a ‘genuine redundancy’ where:
• The role is no longer required to be performed by anyone
• The employer has complied with any consultation obligation under the applicable modern award or enterprise agreement and
• It was not reasonable in all the circumstances to redeploy that person into the employer’s business (or into the business of an associated entity).
Importantly, if a redundancy is a “genuine redundancy” at law, it is an absolute defence to an employee bringing an unfair dismissal claim. This means that an employer understanding the extent of its redeployment obligations is essential to a business minimising its legal risk.
Helensburgh Coal Pty Ltd v Bartley Background
Helensburgh Coal is a large mining company that employs workers to operate a coking coal mine owned by Peabody Energy in Helensburgh, New South Wales.
Helensburgh Coal engaged Nexus Mining and Mentser to supply contractors on an ‘as needs’ basis to supplement its permanent employee workforce at the mine. Due to a reduction in demand for coking coal, Helensburgh Coal restructured its operations at the mine during COVID-19. While some of the contractors’ work was insourced to existing employees, Helensburgh Coal decided to dismiss 90 employees and reduce its contractor workforce by 40 per cent. There were no vacant roles within Helensburgh Coal, nor was it foreseeable that a vacancy might arise in the future. Despite these mass redundancies, Helensburgh Coal did not terminate its existing service agreements with Nexus and Mentser.
Twenty-two of the employees challenged their dismissals in the Fair Work Commission (FWC), arguing that their dismissal was unfair and not a ‘case of genuine redundancy’ as Helensburgh Coal could have redeployed them to other roles occupied by contractors from Nexus and Mentser.
High Court Decision
The starting position for the High Court was the same as it has always been – a dismissal will not be a ‘genuine redundancy’ if it would have been ‘reasonable in all the circumstances’ for the employee to be redeployed within the employer’s enterprise or that of an associated entity. Like any employer, Helensburgh Coal argued that in considering what was ‘reasonable in all the circumstances’, the FWC couldn’t dabble into how the employer chose to run their business, in particular, couldn’t consider if the employer could have created a new position for the redundant employee.
The big change was the High Court completely disagreed. The Court found that the Commission could have regard to the very nature of the employer’s enterprise, and that how an employer uses its workforce or the reasons behind these operational decisions are relevant in determining whether it would have been ‘reasonable in all the circumstances’ to redeploy an employee within the employer’s enterprise. Most notably for employers, the High Court found in the circumstances before Helensburgh Coal that redeployment was ‘reasonable’ even where no vacant position exists within the employer’s enterprise, and redeployment would require a reorganisation of the employer’s workforce to create such a role.
The Court also found that other broad circumstances could be looked at by the FWC including:
• The attributes of the redundant employee, such as their skill set, experience, training and competencies
• The employer’s workforce policies, its appetite for risk, plans, processes, procedures, business choices (for example, a decision to terminate a contract in the future or a decision to continue using contractors)
• Decisions regarding the nature of its workforce, such as whether it has a blended workforce of both employees and contractors
• Contract terms, such as whether they are ‘as needs’ contracts and whether the contractors are on daily work orders or long-term fixed commitments
• Practical concerns, such as whether redeployment would require the employee to undergo further training
• Anticipated changes, such as another employee going on parental leave or retiring, a contract expiring, or a position being performed by a contractor while waiting for an employee to be hired.
Relevantly, the High Court emphasised that the Commission can consider whether there was work or a demand for work within the employer’s enterprise (or that of an associated entity) at the time of the dismissal, which could have been performed by the otherwise redundant employee.
Take aways for the crane industry
Before undertaking a restructure, a company should adopt a detailed process for considering redeployment opportunities before proceeding with a dismissal. This is because the Commission can enquire into a broad range of matters when determining whether it was reasonable to redeploy an employee prior to dismissal.
So, what should the process look like? Ultimately, what the process looks like will vary depending on the business, such as its size. This is because the reasonableness of redeployment is assessed on a case-by-case basis. Workforce planning materials such as organisational practices, policies, procedures, strategies and plans will be centrally relevant in determining whether a redeployment opportunity is reasonable.
However, broadly, the process should include an assessment of:
• Whether operations could reasonably be adjusted both within the enterprise and across related entities, including an employer’s use of external contractors, labour hire employees, or insourcing a previously outsourced role
• Whether an employee can be retrained or redeployed to fill a short-term vacancy.
We recommend that employers seek legal advice if they are uncertain about their redeployment obligations.
Authors: Holding Redlich Partner Michael Selinger, Senior Associate Olivia Lawrence.