Consultation is key – ensuring you meet the genuine redundancy requirement

The building and construction industry, like most industries in Australia, is subject to fluctuating workloads and changing commercial demands. At times, businesses may need to take steps to maintain financial viability, including reducing expenses through redundancy.

However, even where there is a legitimate business reason for workforce reduction, employers must ensure that any redundancy is legally compliant. A failure to properly consult can result in a dismissal being found unfair, even where the underlying operational reasons are sound.

Obligations of employers

The decision to make an employee redundant constitutes a major workplace change. Under Clause 37 of the Building and Construction General On-Site Award, employers must comply with specific consultation obligations when introducing major changes to the organisation or structure of the business.

Under the Award an employer must:

1. Give notice of the changes to all affected employees and their representatives (if any);
2. Discuss with affected employees and their representatives (if any)
3. The introduction of the changes; and
4. The likely effect on employees; and

• Measures to avoid or reduce the adverse effects of the change on employees.

1. Commence discussions as soon as practicable.

A recent case demonstrates that the obligation to consult is not a procedural formality but a critical component in establishing that a dismissal is a genuine redundancy.

Recent case: Failure to Consult on Redeployment

The importance of genuine consultation was recently highlighted in Caycee Horsnell v Ceva Logistics.

In that matter, the employer decided to make several employees redundant and commenced a consultation process. The applicant, who was employed as an operations supervisor, lodged an unfair dismissal claim, arguing that her redundancy was not genuine.

A central issue was that, at the time of her dismissal, the company had approximately 18 vacant roles. These vacancies were not disclosed to the applicant, nor were they discussed as potential redeployment opportunities.

The Fair Work Commission found that the employer had failed to comply with its consultation obligations because it did not meaningfully discuss measures to avoid or reduce the adverse effects of the change — namely, redeployment. The Commission emphasised that consultation must provide employees with a genuine opportunity to respond and potentially influence the decision-making process.

Key takeaways for employers

• Consultation must be timely (before a final decision is made).
• Consultation must be genuine and interactive, not merely informational.
• Employers must actively consider and discuss redeployment opportunities, including existing vacancies.
• Records of consultation meetings should be kept.

Redundancy may be a legitimate commercial response to changing business needs, but it will only be lawful if employers comply with their consultation obligations in a meaningful way. As demonstrated in Horsnell v Ceva Logistics failure to properly consult, particularly in relation to redeployment opportunities, can render a dismissal unfair and the redundancy invalid. Employers should ensure consultation is timely, transparent and genuinely aimed at minimising the impact on affected employees.

If you have any questions or need further guidance, please don’t hesitate to contact our Advisory team:

📞 (02) 6175 5900
📧 workplace@mba.org.au