HR&IR Update | Ulan Full Bench appeal fails: what does reasonable redeployment require?

November 2010

On Friday, a Full Bench of Fair Work Australia handed down a decision dismissing an appeal by Ulan Coal Mines (Ulan).

The decision provides an authoritative guide to one of the vexed questions of the Fair Work Act 2009 - what steps must an employer take to redeploy a redundant employee, so as to avoid an unfair dismissal.

In this regard, under the Fair Work Act 2009, an employee cannot bring an unfair dismissal in relation to a 'genuine redundancy'. However, a redundancy is not genuine if:

  • it would have been reasonable to redeploy the person – either within the employer or an associated entity of the employer, or
  • the employer has not complied with consultation obligations in an industrial instrument.

Critically, it seems that facilitating the employee applying for an advertised position is not enough. It seems that the employee should be given some form of preference at least – if not actually placed in the position directly.

What is more, this same logic extends to redeployment to another company within the wider corporate group – provided there is common overall managerial control.

This is the second appeal in relation to the same restructure. The first appeal – where Ulan was successful – concerned the meaning of redundancy and the requirement to consult with employees.

In this update, we summarise both decisions and their implications.

The facts

Ulan is a coal mine near Mudgee in New South Wales. Ulan is part of the Xstrata Group – which operates a number of coal mines in New South Wales (NSW Xstrata Mines) – although some distance away from Ulan (with the closest being 100km away).

As part of a restructure in August 2009, 14 coal miners from Ulan were retrenched. The identity of the miners retrenched was ultimately determined by (essentially) 'last on, first off' – which was the selection process required by the relevant enterprise agreement.

Ulan facilitated the retrenched miners making applications for vacant positions at other NSW Xstrata Mines. However, the selection was a competitive process and the retrenched miners were not given any preference. Three of the retrenched miners were ultimately successful – although after they were retrenched – in obtaining positions at NSW Xstrata Mines. ('Re-employed Miners')

Ten of the retrenched miners filed unfair dismissals – including the Re-employed Miners.

The first decision and appeal

In his first decision, Commissioner Raffaelli found that:

  • the retrenched miners positions were not redundant – as the retrenchments were due contracting out of some functions and a decision to increase the number of trade-qualified miners, and
  • Ulan had not complied with the consultation provisions in the relevant enterprise agreement.

On appeal, a Full Bench overturned Commissioner Raffaelli's decision. In this regard, the Full Bench decided:

  • the retrenched miners positions were in fact redundant. It did not matter that the positions of some of the retrenched mine workers might continue, albeit filled by a trades qualified miner worker, and
  • Ulan had generally complied with the consultation provisions in the enterprise agreement. There was no need for more individualised consultation because the enterprise agreement provided for 'last on, first off'. However, it is important to appreciate that:
    • Ulan conducted extensive group consultations with the union, at which each of the retrenched miners were present, and
    • the Full Bench indicated that individual consultation may be required in other circumstances.

The matter then returned to Commissioner Raffaelli.

The second decision and appeal

Commissioner Raffaelli found:

  • 6 of the Miners were not 'genuinely redundant' on the basis that reasonable steps were not taken to redeploy them – so could bring unfair dismissals,
  • 3 employees were not interested in taking up a job far from where they lived – so it was reasonable not to redeploy them (Local Miners), and
  • it was not reasonable to redeploy one of the Miners – who was injured and on light duties without a clear prognosis (Injured Miner).

Both Ulan and the Local Miners appealed. There was no appeal by the Injured Miner.

The Full Bench dismissed both appeals. They decided Commissioner Raffaelli's decision was open to him. They also said:

  • it is an essential part of the concept of redeployment that a redundant employee be placed in another job as an alternative to termination of employment. Redeployment does not include employment after retrenchment – in fact if an employee is re-employed after retrenchment, that might suggest that redeployment at the time would have been reasonable. Consequently, the Re-employed Miners could potentially bring unfair dismissals
  • the job must be suitable – meaning that the employee must have the skills and competence required to perform it to the required standard either immediately or with a reasonable period of retraining. Other considerations may be relevant such as;
    • the location of the job,
    • the remuneration, and
  • where an employer decides that, rather than fill a vacancy by redeploying an employee into a suitable job, it will advertise the vacancy and require the employee to compete with other applicants, this could mean that the resulting dismissal is not a case of genuine redundancy, and
  • The same logic applies where the employer is part of a corporate group which is subject to common overall managerial control.

Implications for employers

  • To avoid a potential unfair dismissal, an employer would ideally redeploy a redundant employee to a suitable vacant position directly – rather than requiring a competitive application process.
  • If there is to be a competitive application process, you may wish to consider giving preference to the redundant employee over other candidates. However, this will not necessarily be enough to avoid an unfair dismissal.
  • The same approach should be adopted with associated entities, where the employer and the associated entity share common overall managerial control.
  • Redeployment should be considered where the redundant employee is not able to perform the role immediately, but requires 'reasonable' retraining.