Redundancy: Two Recent Cases of Interest
Wednesday 27 November 2013 @ 10.51 a.m. | Industrial Law | Trade & Commerce
The issue of redundancy is always a controversial one in any employment context and often ends up in the courts. Two recent cases highlight the complexities involved.
In the first case, Schultz v Scanlan & Theodore Pty Ltd [2013] FCCA 1096 (18 October 2013) the Federal Circuit Court considered a case brought against the Melbourne-based fashion house Scanlan & Theodore for unfair dismissal by an employee it made redundant after she had fallen pregnant. While in Commonwealth Bank of Australia v Barker [2013] FCAFC 83 (6 August 2013) the full Federal Court of Australia had to consider an appeal in a case where the respondent’s position with the appellant Bank was made redundant and the primary judge granted damages for the appellant’s breach of an "implied term of mutual trust and confidence by acting in serious breach of its redeployment policy" and whether the primary judge erred in finding there was an "implied term of mutual trust and confidence" in the employment contract.
Schultz v Scanlan & Theodore Pty Ltd
In her application to the Federal Circuit Court of Australia, the applicant Schultz alleged that Scanlan & Theodore breached the Fair Work Act 2009 (Cth) by firstly trying to limit her leave to six months, and then terminating her employment to prevent her from exercising her right to parental leave.
In his judgement, O’Sullivan J disagreed with the applicant and cited several reasons for his decision, citing for example the fact that Scanlan & Theodore had experienced "diabolical" sales numbers in recent months, had already made several other employees redundant, and had warned employees of further redundancies before making Schultz redundant. His honour also considered relevant that Scanlan & Theodore had "a history of supporting women taking maternity leave and coming back to the workplace".
His honour considered:
"There was substantial and objective evidence in support of the respondent's position that the reason for the decision to terminate the applicant's employment was solely redundancy . . ."
His Honour took the view that the evidence did not support the applicant's claim that there was some sort of veil to hide another ulterior reason for Schultz being fired.
As Rachel Drew, of Tresscox quoted by SmartCompany in its comment on the case says:
"Here, we had a combination of a pregnant employee who had taken some sick leave that had nothing to do with the pregnancy, a business still trying to make arrangements about her maternity leave, and a business with declining sales figures . . . There were a number of changes in the business even this employee's history shows she was offered two promotions in just the 18 months she worked there that make it likely that when a change occurs, it's for a genuine reason rather than being a thin veil to hide adverse action."
Commonwealth Bank of Australia v Barker
The facts of this case have been previously reported by TimeBase.
At trial the trial judge agreed with the respondent that an implied term of mutual trust and confidence existed in his contract of employment with the appellant. Additionally, the content of the duty was informed by a clause in the respondent's contract which contemplated his employment may be terminated in the event that the appellant was unable to place him in an alternative position.
On the facts of the case, their Honours held that the implied term required the appellant to take positive steps to consult with the respondent about the possibility of redeployment and found that the appellant's actions were sufficient to amount to a breach of the implied term to consult with the respondent about alternative positions and to give him an opportunity to apply for them.
The appellant was unable to do what was required of it because it withdrew the respondents access to his work email and mobile phone and neglected to inform the person responsible for communicating with the respondent about these events.
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