Fair Work decision signals warning for COVID-19 redundancies

In a previous update we noted that while Covid-19 has created a unique situation, standard employment law procedures still apply and must be followed. A recent case in the Fair Work Commission (FWC) demonstrates the risks resulting from a failure to follow the appropriate procedures.

In Australian Municipal, Administrative, Clerical and Services Union v Auscript Australasia Pty Ltd [2020] FWC 1821, the FWC assessed an application bought by the Union alleging that Auscript failed to consult in respect of employee redundancy and closure of sites.

In January 2020, Auscript decided to close offices in Hobart and Adelaide as well as downsizing one of its Sydney offices. This was done without consultation with the Australian Municipal, Administrative, Clerical and Services Union (ASU). The ASU and Auscript agreed to develop a joint Consultation and Communication Protocol (the Protocol) to avoid further potential failure in Auscript complying with their obligations under the Auscript Australasia Enterprise Agreement 2010.

Auscript sought to make further redundancies in response to the impact of Covid-19 on its transcription work. Auscript alleged that restrictions in Courts and Tribunals as well as its own forecasts necessitated the sudden decision to maintain the viability of its business. Auscript claimed that it fulfilled its obligations under the Protocol. The ASU disagreed and sought the urgent assistance of the FWC.

At a conference the FWC issued a statement which among other things noted that the parties agreed to “abstain from any compulsory redundancy until at least the parties finalise a strategy … to preserve as many jobs as possible and communicate the identified options clearly to staff so they can make informed decisions”. No agreement was able to be reached after the conference and Auscript would not commit to engage in further consultation. Auscript sought to press ahead with closing the Melbourne office and implement redundancies in Queensland. The matter was then progressed to a hearing.

Upon perusing the evidence, Commissioner Yilmaz determined that Auscript had not given genuine consideration to options other than redundancy. The Commissioner was not satisfied the participation in the conference by Auscript was not genuine, describing its actions as a “mere formality”. The Commissioner criticised Auscript’s communication to employees, labelling it an “empty offer” and not “genuine consultation.” Further, Commissioner Yilmaz concluded it was clear the company had already made a decision unable to be influenced by employees or their representatives.

While it was accepted by all parties that it was a necessity that major decisions had to be made, the Commissioner noted that “an obligation to treat staff with dignity” remained. Accordingly, the Commissioner made an order in favour of the ASU.

The JCL team are closely monitoring the legal developments arising from the COVID-19 pandemic and will continue to provide updates when available. If you would like to speak with a member of our team regarding any of the matters raised in this article, please do not hesitate to contact us on 1800 JCL LAW.