In a recent Fair Work Commission (the “FWC”) decision, a failure to consider JobKeeper was a relevant factor in finding that a retrenched employee had been “unfairly dismissed”.

Background

The employer made the decision to terminate the employment of Mr B by reason of redundancy on 7 April 2020 after being heavily affected by the COVID-19 shut-downs. Mr B was notified of that decision on 8 April 2020 and his employment was terminated with immediate effect. This occurred without consultation as required by the Clerks – Private Award 2010.
At the time of the dismissal, the JobKeeper subsidy had only recently been announced by the Federal Government on 30 March 2020.

Mr B subsequently filed an application for unfair dismissal.

Findings

The FWC first considered whether the matter was a “genuine redundancy” pursuant to section 389 of the Fair Work Act 2009 (Cth) (the “FW Act”). While the FWC did find that the employer no longer required the role to be performed by anyone because of changes in the operational requirements of the business, it found that the termination of employment was not a “genuine redundancy” as the employer had failed to consult in accordance with the Award. The FWC rejected the argument that consultation obligations had “surely” changed by reason of COVID-19.

The FWC stated that it could not be known what may have come out of a proper consultation of all affected employees, noting that a proposal to reduce hours or an offer to take leave without pay pending clarity on JobKeeper eligibility may have been put forward as a means of securing Mr B’s employment. By reason of the failure to consult, the dismissal was found not to be a “genuine redundancy”. As a consequence, the FWC turned its mind to whether Mr B had been “unfairly dismissed” in accordance with section 385 of the FW Act.

In its assessment of other relevant matters pursuant to s 387(h) of the FW Act, the FWC considered the JobKeeper subsidy, the failure to consult and subsequent recruitment by the employer. In respect of the JobKeeper subsidy, the FWC noted that the purpose of JobKeeper was to ensure employees and their employer maintained a relationship, to minimise job loss and minimise redundancies. While the FWC acknowledged that the employer may not have understood the operation of JobKeeper at the time of dismissal, it noted that the same applied to many other employers who managed to maintain employees until such time as the JobKeeper payment came through.

While the FWC acknowledged that the circumstances looked “bleak” for the employer at the end of March 2020, the FWC found that the decision of the employer to employ 2 further sales consultants in May 2020 indicated that there may well have been opportunities for Mr B to be redeployed. The FWC further considered the failure of the employer to consult with Mr B as noted above.
In consideration of the above, the FWC concluded that the dismissal was harsh and unjust and that Mr B had been unfairly dismissed.

Takeaways

• It is important that employers are aware and comply with “consultation obligations” arising under a Modern Award or Enterprise Agreement to minimise the risk of a successful unfair dismissal claim following the dismissal of an employee by reason of redundancy.

• Employers should be mindful that a failure to consider JobKeeper may be a relevant factor in determining whether a dismissal is unfair. This is particularly so in the case of dismissals found not to be “genuine redundancies” pursuant to s 389 of the Fair Work Act 2009 (Cth).