Made 'redundant' after the former owner's wife wanted him gone

What happened

Tony Podesta knew the family behind the business: he had worked for companies in their group between 1991 and 1996, and again from 2000 to 2002. In December 2016 he asked the former owner if he could start a new company for the family. He began as a contractor and, once the business was profitable, became an employee of Catering Equipment Discounters Pty Ltd in January 2017 as its National Sales and Marketing Manager.

In 2017 the former owner of the group handed control of the companies to his two sons, and Mr Podesta said he worked well with both. The former owner also asked him to set up a coffee business for his wife. After three months it was handed back to Mr Podesta to restart.

In early December 2019 the former owner's wife confronted Mr Podesta in his office. On his evidence she was “screaming” and “abusing” him. The former owner, he said, then told him he was “in a no-win situation”, because his wife was “going to leave me if I don't let you go”. Mr Podesta believed she had read emails about “things” he and the former owner had been doing, which the judgment never identifies.

On 6 January 2020 he was called into a meeting without being told what it was about. He was handed a letter ending his employment because of “financial difficulties and a need to reduce costs”, given two weeks' notice and four weeks' redundancy pay ($6,923.08), and told to take his belongings and leave immediately.

The claim

Mr Podesta lodged an unfair dismissal application on 23 January 2020. The company answered that it had made a loss and had shared his duties among its directors, so his dismissal was a genuine redundancy. That matters because under s 385 of the Fair Work Act 2009 (Cth) a dismissal that is a case of genuine redundancy cannot be an unfair dismissal, and s 396 requires the Commission to decide that question first.

The company filed no witness statements or documents apart from a profit and loss statement it was ordered to produce. Deputy President Boyce said that was its choice, but it “cannot escape the consequences”. He found Mr Podesta an honest and forthright witness, and the employer's cross-examination of no assistance.

Was it a genuine redundancy?

Under s 389, a dismissal is a genuine redundancy if the employer no longer needs anyone to do the person's job because of changes in the operational requirements of its business, and it has followed any duty to consult in an award or enterprise agreement. It is not a genuine redundancy if it would have been reasonable to redeploy the person within the business or a related company. The employer must prove this.

The profit and loss statement showed a shortfall in profit of $39,093 over the year, but it also showed the company was still profitable, and Mr Podesta's evidence was that the family's group of companies employed about 20 people. The Deputy President held that the statement, “without additional context”, could not meet the employer's burden of proof.

He found it more probable that Mr Podesta was dismissed to appease the former owner's wife, not to cut costs. That was “solely the consequence of souring marital relations”, which falls outside operational requirements. The redundancy objection failed at that first step.

Why the dismissal was unfair

Section 387 lists what the Commission must weigh in deciding whether a dismissal was harsh, unjust or unreasonable. The first is whether there was a valid reason related to the worker's capacity (ability to do the job) or conduct. A valid reason must be sound, defensible and well founded, not capricious or spiteful.

The real reason here was that the former owner felt he had to choose between his marriage and Mr Podesta's job. The Deputy President held that this “is not a valid reason”, had nothing to do with Mr Podesta's conduct or capacity, and could be described as “capricious”.

On procedure, being called to a sudden meeting with no notice of its purpose effectively denied him the chance to bring a support person, although the Deputy President treated that factor as neutral overall. The family's businesses were a small operation, but that “does not absolve” an employer from giving procedural fairness. The dismissal was found harsh, unjust and unreasonable.

How much was awarded

Mr Podesta did not seek reinstatement. The Commission accepted that, but for the dismissal, he would have worked for a further six years until retirement. The law caps compensation at 26 weeks' pay, however. On a salary of $90,000 (the employer's figure), 26 weeks came to $45,000.02.

From that the Commission deducted the redundancy pay ($6,923.08) and two weeks' notice ($3,461.54), leaving $34,615.40, plus $3,288.46 in superannuation. Starting his own business, which had not yet earned him anything, counted as a reasonable effort to reduce his loss. Nothing was added for shock or distress, which the Act does not allow.

What this means for you

Calling a dismissal a redundancy does not make it one. If your job was cut soon after a personal falling-out with someone close to the owner, it is worth asking whether the business genuinely no longer needed the role, and what evidence the employer has of that. A loss on paper is not enough on its own. If you think you were dismissed unfairly, consider getting advice early: an unfair dismissal application must be lodged with the Fair Work Commission within 21 days of the dismissal taking effect.