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Consultation failings crushed JobKeeper option

According to FWC, it was not a genuine redundancy but an unfair dismissal.
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Consultation failings crushed JobKeeper option

Consultation failings crushed JobKeeper option

11 September 2020

When a vehicle leasing business “retrenched” an employee because of a COVID-19-caused downturn in business, it failed to consult with him over its decision. The result was that his employment ended between the general announcement of the JobKeeper scheme and release of its details and implementation. Had the employee been properly consulted, he would have remained employed long enough for JobKeeper to have become a possible option for him, and other options may also have been available but were not considered. Therefore, according to the Fair Work Commission, it was not a genuine redundancy but an unfair dismissal.


Facts of case

The employer was a vehicle leasing management company. It hired the employee to retain novated lease clients, by either rolling over existing leases or arranging replacement ones. It claimed that when COVID-19 restrictions were first imposed in March 2020, its business “dried up overnight”. There was a 50% decline in settlements and a 30% decline in retention.

The leasing business was a subsidiary of a parent company that provided shared services to it, and its decline contributed to an overall decline for the parent group. The latter “retrenched” three employees from the leasing company on 9 April 2020, 10 days after the initial announcement of JobKeeper. However, it did not consult with any of them, as was required by the relevant (Clerks’) award. As a result, no other possible options were discussed.

The employee could have taken unpaid leave until the situation became clearer, and/or further information about the operation of JobKeeper became available. At the very least, the time taken up by consultation would have delayed making the decision until the Jobkeeper eligibility details were known. Some other employees were forced to take annual leave or pay cuts, but were retained.

The FWC commented that other employers in a similar situation had managed to retain their employees until JobKeeper payments began to arrive. Also, the company had employed two new sales consultants the following month (May 2020), indicating that business had improved by then.


Decision

The FWC found that, because the employer had failed to consult with the employee before ending his employment, it was not a genuine redundancy but an unfair dismissal. It called for submissions from the parties regarding compensation.

The bottom line: In one way, this case arose from “one-off” circumstances – the employer suffered a sudden decline in business and the government responded a few weeks later with the “safety net” of JobKeeper. However, its relevance extends beyond that. Because the employer failed to meet its legal obligation to consult with the employee before making him redundant, it (inadvertently in this case) closed off access to one of the options that could have preserved his job.


Read the judgment

Browne v MySharedServices Pty Ltd {2020} FWC 4445, 26 August 2020

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