Made redundant by her husband's company after they separated

What happened

Ms Ranchod and her husband started a small technology business together. It sold products such as phone cases and smart locks. She said she co-founded the company and had worked in it since 1 January 2012, bringing a marketing degree and twenty years of corporate experience. By the time of the dispute she was its Marketing Director on a package of $153,300 a year. Her husband was the CEO and a director.

The marriage broke down, and the couple separated in November 2020. Ms Ranchod said she was then shut out of the business: when the company moved offices that month she was not given a key to the new premises, and early in 2021 a contractor was brought in to run the company's marketing, which was her job. On 2 March 2021 she received a short letter saying her position had become redundant, with three weeks' notice. Her employment ended on 23 March 2021.

The company said the decision was about money. COVID-19 had hit, investors would fund no more, and she was the most expensive person on the books. Her notice pay and other entitlements were also held back until she returned the car she drove.

The claim

Ms Ranchod applied to the Fair Work Commission for an unfair dismissal remedy under s 394 of the Fair Work Act 2009 (Cth). She argued the redundancy was a ruse to remove her from the business because the marriage had ended.

The company objected that the dismissal was a case of genuine redundancy. That objection matters: if a dismissal is a genuine redundancy, the employer has a complete defence and the Commission cannot ask whether the dismissal was unfair at all. Deputy President Asbury decided the objection and the merits together.

Why: the legal test

Under s 389 of the Act, a dismissal is a genuine redundancy only if two things are true. First, the employer no longer needed the person's job to be done by anyone because of changes in the operational requirements of its business. Second, the employer followed any duty in an award or enterprise agreement to consult about the redundancy.

Even then, s 389(2) says it is not a genuine redundancy if it would have been reasonable to redeploy the person, meaning move them into another job or other work, within the business or an associated entity. It is enough that there was work the person could reasonably have done.

The employer raising the objection must prove these things, because the facts are in its hands. The company tendered no financial records or evidence about its workforce before and after the dismissal, and its own written outline answered "No" when asked whether there had been changes to its operational requirements. As she was not covered by a modern award, there was no consultation duty to meet.

What the Commission decided

The Deputy President accepted that the company was in difficult financial circumstances and that it needed less marketing. But that was not enough. There was a new smart lock about to be launched, the husband himself said a marketing person would be needed again if the business recovered, and months before the dismissal the company had hired a contractor to do marketing. She was not satisfied that the job was no longer required because of a change in operational requirements.

The redeployment exception also applied. Every employee was working part-time on JobKeeper when she was dismissed, and Ms Ranchod had done a wide range of work in the business beyond marketing. The Commission found it would have been reasonable to keep her on part-time, like everyone else, until things improved.

With the objection gone, the Commission turned to whether the dismissal was harsh, unjust or unreasonable under s 387. It found that the husband had used the COVID-19 downturn "to disguise the dismissal of his estranged wife as a redundancy". It counted against the company that she was locked out for months, told by letter, never consulted, and had her entitlements withheld over a car that was not part of her contract. It concluded it was more probable than not that her being his estranged spouse played a role in the dismissal. The dismissal was unfair.

How much was awarded

Ms Ranchod asked to be reinstated, but the Commission refused: the working relationship was irretrievable, and her main reason for wanting her job back was to protect her interest in the business, which is a matter for other courts, not the Commission.

Instead it ordered compensation. It estimated she would have stayed only about four more months, because the relationship would have come to a head, and that she would have been on reduced, part-time hours like the rest of the staff. The order was $27,068.65, less tax, plus $2,571.50 in superannuation. The claim that any order would send the company insolvent was rejected for lack of evidence.

What this means for you

Calling a dismissal a redundancy does not make it one. If you are told your role is redundant while someone else is brought in to do your work, or while other staff are offered reduced hours and you are not, it is worth asking whether the redundancy is genuine. The employer must prove it, with evidence.

A spouse employed in a family business has the same rights as any other employee. If you have been dismissed, act quickly: an unfair dismissal application must be lodged with the Fair Work Commission within 21 days of the dismissal taking effect.