Can someone be made “artificially redundant”? An adverse action claim due in court later this month highlights the complexities of this scenario.
An HR manager has launched an adverse action claim against her former employer – a biotechnology company – claiming she was made “artificially redundant” after speaking up about COVID-related WH&S issues.
Workplace Express reports the former employee was hired with the official title of ‘head of human capital’ (she’s referred to as ‘HR manager’ throughout this article) in February 2020 on a base salary of $250,000, plus superannuation. Initially, she was based in the company’s Sydney headquarters and reported directly to the CEO.
Shortly after her appointment, she allegedly suggested the company let “at-risk or immunocompromised” employees work from home due to the pandemic and raised concerns about how it was implementing JobKeeper payments.
The HR manager claims she was then edged out of the company after being put through a series of “humiliating” workstation rotations.
In July, allegedly without consultation, she says the company hired a ‘director of human capital’ – a position senior to hers, but with substantially similar job responsibilities. Another HR hire was made in October. Following a restructure, the HR manager was reportedly retrenched in November 2020.
The HR manager believes the company saw her as a “troublemaker” and that speaking up ultimately led to her retrenchment. This is the basis of her adverse action claim, which is due to be heard in the courts later this month. She is seeking compensation of a year’s wages, plus damages and penalties.
So, does she have a leg to stand on?
Unpacking the adverse action claim
Aaron Goonrey, partner, Workplace Relations & Safety at Lander & Rogers, says in circumstances such as these, where adverse action is claimed, the employer will likely need to prove the redundancy is genuine.
“If someone’s exercising a workplace right and an action is taken against them where their employment is terminated or that injures them or their employment as a result of redundancy of their position, then that may amount to adverse action [under the Fair Work Act],” says Goonrey.
At the heart of this claim, is the role of the more senior hire that led to the redundancy and ultimate retrenchment. Goonrey says if someone is hired in a more senior position due to actual need within the organisation – and it subsequently results in a redundancy – that’s perfectly lawful. But, if the hire is “like for like” with the existing employee, there may be an issue.
“In this instance, [to prove the redundancy was genuine, the employer could argue] it was because they hired a more senior person who was probably more experienced and had the skillset and knowledge they required,” he says.
The HR manager is arguing this is not the case. In ‘general protections’ claims like these, there’s reverse onus of proof – meaning the employer will have to disprove it breached a workplace right, rather than the employee having to prove they did.
Does an employer need to consult before redundancy?
The HR manager argues she was not consulted when the hire was made above her. Goonrey says a company’s obligations to consult an individual employee about the redundancy of their position will depend on the circumstances of each case.
There are differing obligations relating to employees who are covered by awards and enterprise agreements, and those who are not, he says. If a “major [workplace] change” is happening – such as a restructure – there might need to be wider consultation.
“Unless [the HR manager] has a contractual obligation to be consulted about a restructure – which I think is unlikely – the argument to be consulted about the redundancy of her role probably only arises by way of best practice, unless she is covered by a modern award or enterprise agreement,” he says.
“If someone’s exercising a workplace right and an action is taken against them where their employment is terminated or that injures them or their employment as a result of redundancy of their position, then that may amount to adverse action.” – Aaron Goonrey, partner at Lander & Rogers.
So, consultation obligations aside, it could have been a courtesy to consult the HR manager, particularly as reporting lines were changing.
Goonrey suggests organisations should give an employee whose role is being made redundant an opportunity to consider the options available, including redeployment or other mitigating factors, before deciding on retrenchment.
Generally speaking, he says, best-practice consultation may involve: “having a meeting with [the employee] and telling them a definite decision has been made to make their role redundant; [seeing] whether or not there are any redeployment opportunities; giving them the chance to consider what’s been said and come back in another meeting to look at what they have to say and whether there are any mitigating circumstances that the employer should consider.”
This kind of open communication may help mitigate the risk of an adverse action claim ending up in court.
Keep a paper trail
Goonrey says another thing to keep in mind in claims like these is the subtle distinction between a workplace ‘issue’ and a complaint about a workplace right. It needs to be established whether the ‘issue’ an employee has raised is just a passing gripe or a genuine complaint about a breach of a workplace right.
In this case, Goonrey says, it seems that WH&S-related complaints and/or breaches of the law may have been raised, which may work in the former employee’s favour.
He says employers should always assess the risks when making someone redundant – such as considering whether the employee has raised any complaints or grievances in the past – so they can prepare for potential blowback.
He also suggests making sure there’s a paper trail of both complaints and any informal issues that are raised, which will be crucial if a subsequent adverse action claim is made against the employer.
“It may be completely different to the recollection of the applicant, or it could support it – either way, it is a documented trail.”
The case will be before the court again on 26 February, according to Workplace Express.
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