What are the rules around redeployment when employee roles are made redundant?

Failure to offer redeployment to redundant employees can attract legal exposure for employers. The question of whether redeployment is reasonable depends on a range of circumstances. Employers should be in a position to substantiate why, in a redundancy situation, they did not offer options for continuing employment in alternative roles.

When should employers consider redeployment?

Redeployment becomes an important consideration where the employee being made redundant has access to the unfair dismissal jurisdiction. Such employees are barred from bringing an unfair dismissal claim under the Fair Work Act 2009 in cases of ‘genuine redundancy’. A redundancy will not be ‘genuine’ if it would have been ‘reasonable in all the circumstances’ to redeploy the employee to another role within the organisation (including to any associated entities).

For redeployment to be reasonable, there must be a vacant role which the employee has the requisite skills and competency to perform, either immediately or with a reasonable period of retraining. The role must also be suitable having regard to its remuneration, duties, seniority, location and any other factors which distinguish it significantly from the role being made redundant.

Redeployment to a lesser role

While redeployment will ideally entail a transfer to a role of similar pay and status, employers should not assume that an available role of lesser pay or seniority would be undesirable to the employee facing redundancy. Unless there is a very great disparity in salary or status between the available role and the role being made redundant, the most prudent course of action is to put the redeployment opportunity to the employee to reject as he or she sees fit.

In Ferrao v Peter MacCallum Cancer Institute, the Fair Work Commission (FWC) awarded compensation to a research officer who was deemed unsuitable for redeployment to two available positions due to her seniority and specific expertise. In finding in favour of the research officer, the FWC noted that the fact that an employee is too experienced and qualified is not normally a barrier to redeployment, and that the two more junior roles represented reasonable opportunities for redeployment.

An employee may decline an offer of redeployment where the new role is on substantially less favourable terms than their current role. However, provided there are no other suitable redeployment opportunities available, the employer will have complied with its redeployment obligations in making the offer.  In these circumstances, the employee will still be entitled to redundancy pay unless the employer applies to the FWC to reduce or exclude any redundancy pay on the basis that the role declined represented acceptable alternative employment to the redundant role.

‘Fit’ as a relevant consideration

The recent decision of Velasquez v Cabrini Health Ltd has confirmed that ‘fit’, and specifically the likely impact of redeployment on the cohesiveness of the work environment, can also be a relevant factor in determining whether redeployment is reasonable.

In that decision, the FWC found it would not have been reasonable to redeploy a social worker to an available position of lesser seniority due to the negative relationships he had with other members in the team, and in particular with the manager to whom he would report. The social worker had also indicated that he was not willing to accept the diminution in seniority that would come with the role and expected that his more senior skills would be utilised. In these circumstances, the FWC found that there was a high likelihood that his transfer to this role would cause severe disruption and conflict, particularly given the social worker’s lack of respect for his potential manager.

Velasquez is a more extreme example of workplace conflict where significant animosity existed between the applicant and his potential colleagues, much of which was documented in writing. However, the decision does indicate that the impact of a transfer on the cohesiveness and productivity of the workplace can be a valid basis for refusing redeployment in some cases.

The requirement to offer a redundant employee redeployment (where reasonable) reflects the fundamental policy underpinning the unfair dismissal regime – that dismissal should be a last resort. However, this does not require employers to create vacancies or offer roles that are patently unsuitable. Employers can best protect themselves from unfair dismissal claims by properly considering the merits of available redeployment prospects – and documenting those considerations.

A version of this article originally appeared in the July 2018 edition of HRM magazine.