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The COVID-19 pandemic is no excuse for failing to consult employees in a redundancy process

Posted by Shanni Zoeller on 22 May 2020

The COVID-19 pandemic has seen many businesses being forced to make difficult decisions, especially in relation to whether it can keep all, some or none of its employees. Due to closures of businesses up and down the supply chain, the flow on effect has resulted in many employers, both large and small, having to get creative to ensure they can keep their staff employed and see the other side of the pandemic. Some options that employers have been implementing include:

  • reducing employees’ salaries and hours of work,
  • directing employees to take paid and unpaid leave,
  • providing employees with alternative duties, and,
  • where these options have not been viable, standing down employees for an indefinite (albeit temporary) period of time.

For employers who have been unable to initiate the above measures or for those who have but it has not been helpful, the last resort has been to make employees redundant.

Despite these unprecedented times, the Fair Work Commission (FWC) has taken the view that the COVID-19 pandemic is not an excuse to forgo processes when making employees redundant. Employers must strictly comply with consultation obligations contained in an Award, Enterprise Agreement, industrial instrument or company policy before deciding a role will be made redundant.  

A recent case which has dealt with this is ASU v Auscript Australasia Pty Ltd [2020].

Auscript provides transcription services to courts and tribunals across Australia.

Earlier this year, Auscript decided to close its Adelaide and Hobart offices, and significantly downsize its Sydney office which resulted in 25 employees being made redundant. Following this, the ASU wrote to Auscript about these changes and its failure to properly consult with its employees or the union. Thereafter the parties entered into a “Consultation and Communication Protocol” (the Protocol) to ensure that the union was kept across any further changes Auscript proposed to make in the workplace in respect of its members.

As a result of the implementation of self-isolation measures and social distancing requirements, courts and tribunals have had to abort face-to-face hearings and mediations and shift them to be conducted by audio visual technology. Consequently, Auscript saw a 60% reduction in work which further necessitated a downsize in its operations and redundancy of some roles.

On 27 March 2020, Auscript met with its employees and informed them that it was considering four options to ride out the COVID-19 pandemic. These were:

  • office closures;
  • voluntary redundancies;
  • job sharing arrangements; or,
  • reductions in hours of work.

During the meeting staff were provided with a document regarding the proposed changes and that they needed to advise management one the four options by 1 April 2020.  As part of its ‘consultation period’, Auscript stood down its employees. The ASU were not given a heads up on Auscript’s proposal, nor were they involved in the consultation process. They had received a call from a member a few days prior to Auscript’s staff meeting.

Accordingly, the ASU made an application to the FWC to “avert further redundancies and to urge Auscript to consider as part of a consultation process a range of alternative options to redundancy”. However, Auscript decided to press ahead with the closure of the Melbourne office and immediately inform its employees of their redundancy. The same approach was to be taken with employees in the Brisbane office. The FWC held that Auscript did not engage in a genuine consultation process and reaffirmed that:

Consultation has a purpose and it cannot be conducted for mere show. If the consultation does not provide [the employee] with an opportunity to influence the decision, it is of no value and the requirement to consult and the consultation is hollow. By the same token at some point management must be able to make a final decision to terminate employment by reason of redundancy bhaving taken into account the views of [the employee] through consultation.”

Consultation requires “a genuine opportunity for the affected party to express a view about a proposed change in order to seek to persuade the decision maker to adopt a different course of action”.  It isn’t to be treated as a “mere formality”.

The Commissioner found that Auscript did not consult with the employees and although Auscript came to the conclusion that its future is unviable, other options should have been considered and explored including, stand down, utilisation of paid leave or leave without pay, career breaks, access to support programs and any other options. The FWC ordered the parties to resume consultation with its employees.

Key lessons

It is important that employers remain cognisant of their consultation obligations when it comes to any major workplace change. The fact that Australia, and the world is in the midst of a pandemic is not an excuse to forgo the consultation obligations outlined in an award or enterprise agreement, nor will it be a sufficient justification for skipping consideration of alternative options before going down a redundancy path.

It is evident from the Auscript case that employers need to do more than just give lip service to consultation. Genuine consideration must be had to employee feedback on alternatives, and every option should be explored before making a person redundant in this climate.

If you require any assistance in relation to any of the above, please do not hesitate to contact a member of Coleman Greig’s Employment Law team, who would be more than happy to assist you today.