Bad performance; good redundancy

Many employers settle unfair dismissal cases before they get to the Industrial Relations Commission because they are scared they will lose. But employers that have made a worker redundant for genuine reasons need not fear. By ANDREW DOUGLAS

By Andrew Douglas

Many employers settle unfair dismissal cases before they get to the Industrial Relations Commission because they are scared they will lose. But employers that have made a worker redundant for genuine reasons need not fear.

I recently had an application for unfair dismissal thrown out before the hearing of whether the termination was harsh, unjust or unreasonable because the termination was for genuine operational reasons; a redundancy.

The Industrial Relations Commission held that the operational reason was at least part of the decision to terminate, that it was the true reason (as distinct from counterfeit), and there were both structural and economic reasons justifying the redundancy.

So why do people keep expensively settling genuine redundancy cases for fear of running a full hearing? The answer in two words – “ignorance” and “fear”.

WorkChoices changed the laws in the Commission in respect of redundancy. Under WorkChoices, an applicant has no jurisdiction to bring a claim of harsh, unjust or unreasonable termination if an employer can establish:

• The worker’s job was redundant.
• The worker was retrenched as a result.
• The redundancy was, at least in part, the true operational reason for retrenchment (termination).
• The redundancy involved real operational reasons such as structural or technical change or even economic change.

Economic change is a key issue in sales-based business because often the failure of one or more salespeople in a small team make the team unprofitable and there is a need to lose one worker.

That is what happened in this case. Further, there had been no real performance management and some lack of procedural fairness. The employer was understandably concerned that if the matter went for hearing, the worker would be reinstated and he would lose more money and have no way of returning the business back into profit.

All we did was elect to have a jurisdictional hearing into the question of whether the redundancy was genuine. At such a hearing, evidence of whether the termination was harsh, unjust or unreasonable is irrelevant. The hearing was over in two hours with a decision in the employer’s favour.

The lessons for employers are simple:

• Examine poor performance in the context of structural change – for example, if we retrench one, absorb the supervision into another employee’s role and spend more on a CRM (I can sell more at a greater margin).
• Design the redundancy process carefully and document it accordingly – it must demonstrably be the genuine reason.
• Do not waste time with a hearing process if change is unlikely – this will lead to increase losses and poisoning of other employees.
• Tick the jurisdictional challenge election if the worker makes application for unfair termination, and proceed accordingly.

Andrew Douglas  is the founder, principal lawyer and managing director of Douglas Workplace & Litigation Lawyers. Andrew is an experienced commercial litigation and workplace lawyer, who acts both as a solicitor and advocate.

is the founder, principal lawyer and managing director of . Andrew is an experienced commercial litigation and workplace lawyer, who acts both as a solicitor and advocate.

 

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