Failure to consult about subjective selection makes redundancy unfair

As most employers will be aware, an employee dismissed due to genuine redundancy cannot claim unfair dismissal.  Under section 389 of the Fair Work Act 2009 (Cth), in determining whether a dismissal is a genuine redundancy the Fair Work Commission (FWC) is only required to consider whether:

• the job is no longer required due to operational changes
• there has been compliance with applicable consultation obligations and
• reasonable attempts have been made to redeploy.

The methods used by the employer to select employees for redundancy are not taken into account.

However, a recent FWC decision serves as a reminder that selection criteria may come under scrutiny if the employer can’t meet the genuine redundancy threshold, underscoring the importance of complying with any consultation obligations.

In Kumar v Fuji Xerox Australia Pty Ltd¹ the employer took steps to reduce its headcount as a result of a downturn in business. A selection matrix was used to determine who would be made redundant in the first tranche of redundancies which included the following criteria:

• Values and behaviour.
• Productivity.
• Machines per day.
• Timekeeping.
• Workmanship.
• Technical ability.

Each employee was given a score out of 3 for each of the criteria. Mr Kumar, who was an experienced technician with over 20 years’ experience, scored what would normally be considered a high score (16 out of 18). However, due to the narrow bandwidth of the scoring, this was a low score in comparison to his colleagues and his employment was terminated on grounds of redundancy.

The FWC found that Mr Kumar’s termination was not a genuine redundancy due to the employer’s failure to consult with Mr Kumar and his trade union in accordance with the applicable enterprise agreement. This included a failure to consult with the union on the selection criteria that would be used.

The FWC then went on to consider if the dismissal was harsh, unjust or unreasonable. The FWC considered that the scoring system for the skills matrix was flawed due to the narrow bandwidth of the scores and criticised the employer for not giving the employee an opportunity to challenge the selection criteria or the score he was given under it, particularly given the subjectivity of the matrix.

Although Mr Kumar’s dismissal was found to be unfair due to the lack of consultation², the decision noted that the FWC should not stand in the shoes of the employer and categorise or pass judgement on the skills, experience and work ethic of individual members of a workforce.  This emphasises that, provided employers consult with employees about the basis of their selection for redundancy, the FWC will generally not look behind the employer’s reasons for the selection except in extreme cases of blatant unfairness.

¹Kumar v Fuji Xerox Australia Pty Ltd [2018] FWC 3699
²The Respondent was ordered to pay Mr Kumar three weeks’ pay plus superannuation.