Consultation required before redundancy due to COVID-19

A Melbourne hotel has found itself in the Fair Work Commission over the dismissal of a chef due to a failure to consult and engage in face-to-face discussions prior to making the position redundant.

Consultation is a topic we recently touched on in a previous Award Subscription newsletter, and this case emphasises the importance of complying with these obligations.

In summary, the chef, who had over 15 years’ service, lodged an unfair dismissal application, claiming the hotel failed to follow their award consultation obligations in July last year. The directors of the hotel apologised in an email for not speaking with the employee in person, suggesting it was “not possible in the current environment”.

The chef said in support of her unfair dismissal application that she did not respond because the directors made it "abundantly clear that I was being made redundant as they were closing down the business suggesting permanent closure".

But she belatedly filed the application in November, after the hotel advertised on its Facebook page that it was "looking for chefs" to work "35-40hr p/w nights & weekends included contracted award wage".

The hotel told the tribunal it was an "overly ambitious advert" placed by the venue manager and that it had in fact re-engaged two former casual bar workers who performed no kitchen duties.

The employer also objected to the application on jurisdictional grounds, in opposition stating it complied with the Small Business Fair Dismissal Code, and maintained the dismissal amounted to a genuine redundancy within the meaning of s389 of the Fair Work Act.

However, the Commissioner noted that, except for summary dismissals, the code requires employers to have a valid reason based on conduct or capacity.

As redundancies are based on business or operational needs, the Commissioner found the chef's dismissal inconsistent with the code nor constituting a genuine redundancy, as a result of the hotel not complying with their consultation obligations within the relevant award.

It was noted that the Commissioner found there was a “sensible and credible reason” for dismissing the chef, accepting evidence that it had gross income of $55,000 between April and November 2020, compared to $409,370 over the same period in 2019.

The Commissioner also accepted, despite the job advertisement, that the hotel made the former chef's position redundant when it dismissed her and had not since filled it or required the new employees to discharge those responsibilities.

However, she found it breached s389(1)(b) of the Act by failing to comply with the award requirement to tell the chef her position would be made redundant and discuss any "measures to avoid or reduce the adverse effects of changes" on her. 

Rather, they sent the employee a letter notifying her that her position was redundant with no invitation for the employee to bring forward any alternative suggestions. The Commissioner also made reference to the fact that no face-to-face meetings occurred, and suggested that the hotel could have arranged to meet with her via other means.

The employee was awarded two weeks’ pay to cover the further period she would have remained employed if the hotel had complied with their consultation obligations under the Award.

As a reminder, we’ve linked here our previous article on consultation which was provided in the October 2020 newsletter.