Legal

Redundancy for ‘Operational reasons’ clarified

SmartCompany /

‘Genuine operational reasons’ offer an exclusion from unfair dismissal claims, but employers must be able to demonstrate the reason was genuine. By PETER VITALE

How does an employer demonstrate genuine operational reasons for a dismissal? The full bench of the Australian Industrial Relations Commission (AIRC) has clarified this exclusion from the unfair dismissal jurisdiction of the Workplace Relations Act.

The Howard Government’s new WorkChoices laws introduced the exclusion that if an employer can show that an employee’s employment was terminated for “genuine operational reasons”, the employee will not be able to make a claim that he or she was unfairly dismissed.

Since the changes a number of AIRC decisions have indicated it is not sufficient for the employer to simply assert the termination was for reasons of redundancy to take advantage of the exemption.

However, some inconsistent decisions by the commission left some questions about exactly how an employer could show that there were genuine operational reasons for the termination. The full bench has at least partly answered these questions.

In Carter v Village Cinemas, the employer claimed that the termination of a cinema manager’s employment due to the closure of the cinema complex was a genuine operational reason. The employee had been employed by Village for nearly 20 years. He disputed that the reason for his termination was genuine. He claimed that because he could easily have been redeployed, the employer did not have a genuine operational reason. The employee claimed:

. He was the only one of 12 employees not redeployed.

. He had previously worked at nine different locations.

. He gave evidence he would have accepted a position of lower status.

. He offered to take long service leave until a vacancy arose.

. The employer conceded there “certainly would be a possibility” that a similar position would soon arise.

The full bench noted that employers need to demonstrate that the operational reasons are genuine and not a “sham”. However, if the employer can show that the genuine operational reason was the reason for the termination, then the employer need not show that there was justification for the termination of a particular individual’s employment, or that efforts had been made to redeploy the worker.

Whether the employer could have done something other than terminating the employee’s employment is also irrelevant.

In this case the employer showed that the cinema complex had closed and that was the reason for the employee’s termination. There was nothing else for the commission to consider and the claim was dismissed.

The lesson for employers:

To rely on “genuine operational reasons” as an exclusion from unfair dismissal claims, employers must be able to prove why the business needs to support a decision to make an employee redundant.

If there is satisfactory evidence of this, employers will not be required to demonstrate they could have taken alternative measures to redundancy.

Peter Vitale is a solicitor, the General Manager of Workplace Relations Services at VECCI and a principal at CCI Victoria Legal.

Advertisement
SmartCompany

SmartCompany is the leading online publication in Australia for free news, information and resources catering to Australia’s entrepreneurs, small and medium business owners and business managers.

We Recommend

FROM AROUND THE WEB