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Lack of objectivity in redundancy sees adverse action claim

AREEA principal consultant Bill FitzGerald provides some practical and timely advice following a recent Federal Court decision that holds lessons for employers undertaking redundancy assessments.

Bill FitzGerald
Bill FitzGerald

In the case Construction, Forestry, Mining and Energy Union v Clermont Coal Pty Limited [2015] FCA 1014 (11 September 2015), Justice John Reeves of the Federal Court found that the process of selecting an employee, who also was a union organiser, for redundancy was in breach of s340 and s346 of the Fair Work Act 2009 (general protections relating to union activity).

The matter arose in 2014 when Clermont coal embarked on an extensive restructure and redundancy selection process in which assessors ranked employees on a hierarchy of criteria including performance, skills, competencies and attitude.

Justice Reeves was generally satisfied with the process followed by the management team but was concerned that one of the assessors had been ‘distracted’ by a difficult relationship and past ‘terse’ dealings with the union organiser. As such, he concluded that this impacted his reasoning process when assessing the employee in the ‘attitude’ criteria.

Justice Reeves explained that the union organiser’s general manner in the witness stand was ‘direct and blunt’ and his impression was that he adopted the same manner when carrying out his union activities.

“The evidence also shows that, in carrying out his union activities, he was quick to challenge those in authority at Clermont Coal… I also formed the impression that Mr Scott (the union organiser) had a tendency to goad those in authority at Clermont Coal,” Justice Reeves continued.

“For all these reasons, I think it was likely that he was generally known within Clermont Coal’s management team, and by its superintendents and supervisors, as a union activist who was particularly difficult to deal with.”

Justice Reeves said that given the union organiser’s manner and approach, it was ‘always likely’ that management would have difficulty assessing his attitude in the redundancy process.

He also pointed out that s361 of the FWA would not inevitably apply to protect union activists from adverse action but explained how it needed to be considered in this instance.

“However, it does mean that, where an employee’s attitude is a central part of an assessment as to whether he will be subjected to such adverse action and that employee is a union activist, it will be necessary to carefully examine the reasoning process of the person making the assessment to ensure that it is made for a reason associated with his performance as an employee, or more generally, rather than for any reason substantially and operatively associated with his union activities,” he said.

Justice Reeves was ultimately not satisfied that one of the assessors made the distinction between work performance and union activities. He is yet to make orders in accordance with his findings.

Implications for employers

The FWA is far reaching and even though there is no legislative requirement to put in place a selection criteria based on objectivity, it is recommended that employers do so as a matter of course.

The selection criteria should be transparent, relate to the inherent requirements of the job and avoid subjective elements such as ‘attitude’. For example, criteria such as ‘willingness to participate as a cooperative team member’ is far more objective than making a subjective assessment of ‘attitude’.

The criteria should be appropriately weighted according to the specific job requirements and any assessment based on discipline should only relate to warnings or counselling previously recorded.

The redundancy process adopted should be clearly communicated to employees from the outset and strictly complied with. Written evidence should be kept to demonstrate such compliance.

Significantly, it could be argued in this case that if the assessors had been independent of the employees who were being assessed for redundancy, claims of adverse action could have been dismissed.

For further advice on this matter, contact Bill FitzGerald on (03) 6270 2256 or [email protected]. Alternatively, contact an AREEA workplace consultant near you.



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