Businesses have once again been warned to be very careful when organising redundancies or initiating redundancy actions against employees, following a Federal Court case in which RMIT University was fined $37,000.
The case follows numerous warnings to small businesses regarding redundancies, which can only be used in very specific situations. Small businesses sometimes use these as an alternative to outright dismissal with poor results.
M+K Lawyers principal Andrew Douglas told SmartCompany this morning that businesses cannot use personal reasons as a motivator to trigger a redundancy.
“Instead of dealing with the issues at hand, businesses sometimes try and find an easy method which seems to have no pain. But this is what adverse action is trying to stop.”
The court heard professor Judith Bessant had an “impressive” career, with a wide range of disciplines, and no criticism had been directed at her regarding her work.
During a reorganisation of the school in which Bessant worked – the School of Global Studies, Social Science and Planning – there was some tension between her and the school’s head, professor David Hayward.
Hayward removed Bessant from the position of discipline head of social science and the court heard she was so shocked by this decision that, upon reading it in an email, she fainted and knocked out one of her teeth.
Bessant was also alleged to have sent a number of written complaints regarding Hayward’s management practices, including two bullying accusations.
The disagreements between Bessant and Hayward even escalated to a point where Bessant was granted a meeting with vice-chancellor Margaret Gardener about the matter.
While this was happening, the court heard Hayward had already begun making preparations for Bessant’s redundancy, based on a memorandum found on his computer – which Justice Gray said was “detailed”.
“I do not accept that a document of this size and detail would have been prepared just in case Professor Hayward ever wished to use it, which was his explanation for it,” Justice Gray found.
Justice Gray found one of the most “disturbing” aspects of the case was the “absence of any contemporaneous account of the reasons Professor Gardner [gave] for deciding that Professor Bessant should be made redundant”.
“The lack of a clear and cogent process of reasoning, leading to the conclusion that Professor Bessant needed to be made redundant, at any stage of the lengthy and detailed process, is a major factor pointing to the conclusion that there may well have been reasons other than those that were expressed for the making of that decision.”
Douglas says this type of case is not uncommon – businesses find they have a problem with someone on a personal level, and so rather than risk an unfair dismissal, make that person redundant.
“In this case there was a whole lot of evidence the true decision-maker had significant animosity towards the person who was made redundant.”
Businesses can’t simply decide to make someone redundant, Douglas says, even when there are significant personal problems.
“If you want to proceed along this course, nominate a person to be a decision-maker, and be incredibly careful about crafting any discussion which reflects any sort of alternative course.”
“If they weren’t happy with the structure of the school or the professor, they could have dealt with it,” he says.
RMIT University was contacted by SmartCompany this morning, and said in a statement it is reviewing the judgment and will “give consideration to an appeal”.
“The university takes very seriously its obligations under the Fair Work Act and the university’s Enterprise Agreement.”