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Failed to consult, so worker missed out on JobKeeper

FWC ordered compensation to the employee for her loss of JobKeeper eligibility.
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Failed to consult, so worker missed out on JobKeeper

Failed to consult, so worker missed out on JobKeeper

13 August 2020

By Mike Toten

An employee who was made redundant missed out on JobKeeper eligibility because the employer did not consult with her before retrenching her.

The Fair Work Commission then ordered the employer to pay her the extra amount she would have received if registered for JobKeeper. The employee’s award contained provisions re consultation prior to redundancy.


Facts of case

The financial services partnership business retrenched the employee, an administrative assistant employed for more than six years, claiming it had suffered a business downturn caused by COVID-19. At the time, the employer told her that she would be financially better off if it made her redundant and she applied for JobSeeker (instead of JobKeeper). When asked “any questions, comments or suggestions?”, she did not reply. The latter was the extent of “consultation” that occurred. She was retrenched five days before JobKeeper was commenced.

The employer claimed it would have considered putting the employee on reduced working hours if she had asked about it, and in turn the employee claimed she would have considered it if the employer had mentioned it.

Evidence before the FWC was that the employer had not discussed any changes required by COVID-19 until the meeting that retrenched the employee. Merely asking her “any questions, comments or suggestions?” did not satisfy the award requirements of “consultation”, nor did telling her that she would be better off under JobSeeker. A “proper” consultation session should exceed 15 minutes or so. There was evidence that co-workers were offered reduced hours, but the employee was the only one retrenched.

A week before retrenching the employee, the employer held a meeting with all staff and said in general terms that COVID-19 was likely to affect their employment, and they would be informed of developments, but there was no discussion of options.

The award clause required the employer to provide written information about the impact of proposed changes to employees before making a decision, so that the impact and work options could be discussed first.


Decision

Because the employer failed to meet its consultation requirements, it was not a “genuine redundancy” but an unfair dismissal. Had she been properly consulted, the employee would have stayed employed until JobKeeper commenced, and been eligible to register for it while also retaining her job.

An office closure seven weeks later meant that her job would have ended then. The FWC ordered the employer to pay the difference between what she would have received under JobKeeper for that period, and what she received as pay during her notice period – the difference being $3189.

The FWC noted that the employer appeared to have the employee’s best interests at heart when it told her she would be financially better off under JobSeeker. However, the lack of in-house HR expertise in a small business contributed to that advice, and the FWC took this factor into account.

The bottom line: If an award or other employment document has provisions requiring consultation with employees before making them redundant, the employer must consult with the employee in a “genuine” way. This means not making a final decision until after informing the employee of planned changes to the business and/or job and discussing possible alternative arrangements with the employee. In this case, reduced working hours combined with (later) JobKeeper registration was a potential option that would have extended employment by about seven weeks.

Failure to consult does not automatically mean a termination of employment is unfair. The relevant issue is the degree to which lack of consultation led to unfairness in practice.

Because the employer breached the award’s consultation provisions, the FWC ordered it to compensate the employee for her loss of JobKeeper eligibility.


Read the decision

Freebairn v Dandiie Pty Ltd ATF The DM & IT Moore Family Trust, TJL Business Advisors Pty Ltd ATF The Lumtin Family Trust, and Profitwatch Pty Ltd ATF The Rosemark Trust t/a TJL Business Advisors and Accountants [2020] FWC 3915, 27 July 2020

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