Proof of a Genuine Redundancy

A 65 year old man had been working for 4 years with a corporation that manufactured transportable sheds. He was given notice that he was being dismissed effective two weeks after receipt of the notice. He was told that for the two months prior to his dismissal, the company had been operating at a loss. There had been no work for the man for this reason his job as leading hand was already redundant. He was given two weeks’ pay and was terminated.

The man filed an adverse action complaint on the ground that there was no genuine redundancy. Moreover, he should have been given advanced notice that the company was contemplating on dismissing him for redundancy. The company had an obligation to re-deploy him at another department instead of immediately terminating him. He should have been given four weeks’ notice or four weeks’ pay in lieu of notice.

The respondent company’s only witness was a manager who was not yet at the corporation at the time of the man’s dismissal. He did know from looking at the company’s books that they were operating at a loss at that time. He also stated that as a small business with less than 15 staff, they are not required to give him more than two weeks’ pay.

In deciding whether the dismissal was harsh and unjust, the court considered first of all that there was nothing in the man’s record to suggest that his performance was not satisfactory. The court also considered that the man was at an age when finding new work would be difficult. The court also considered whether the respondent company was indeed operating at a loss. There was evidence that for two months, the company suffered losses, but there was no evidence that they continued to suffer financial loss or that continuous operation did not enable them to recoup the losses from those two months. There was evidence that the company advertised to hire someone new to take over the dismissed worker’s former position. There was evidence that a younger person replaced the man and continued to perform the same job. The court also noted that no prior warning was given to the man; neither was there given to him an opportunity to contest the decision. The company did not exert any effort to find an alternative job for him or to make alternative arrangements for him but terminated him precipitately.

The court also considered that even if the shade manufacturing company was indeed a small business with less than 15 persons, they were affiliated with a bigger company. The respondent was a subsidiary and a related corporate entity with a bigger parent company. The two companies are treated as one entity, leading to the conclusion that the respondent is not a small business. Thus, before the man was dismissed, the respondent company should have tried to transfer or find alternative work for him in the parent company. This, the company did not do.

The court found that the man was dismissed unfairly as his dismissal was not related to his capacity to perform satisfactory work nor was it due to any genuine redundancy. The court held that in a genuine redundancy the employee is dismissed because the company no longer requires the person’s job to be performed by anyone because its operational requirements have changed. There was no proof of genuine redundancy. The man was given six months’ severance pay as compensation for his unjust termination.

Reference: Kevin Semph v. Transportable Shade Sheds Proprietary Limited [2013] FWC 4381

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