A recent Full Bench Fair Work Commission decision is a timely reminder that every employer, large or small, must comply with consultation obligations before implementing a redundancy.
In Orientile Pty Ltd v Carson Q Zhang, the Full Bench considered an appeal arising from an unfair dismissal case where an employee was made redundant without proper consultation. The case involved a small business employer, yet the Commission confirmed that consultation obligations remained relevant and significant in assessing whether the redundancy was genuine.
Small business is not an exemption
One of the key takeaways for automotive businesses is that being a small business does not remove the obligation to consult where consultation is required under an applicable modern award.
In the original decision, the employer argued that it was a small business and relied on the Small Business Fair Dismissal Code. The Commission found that the Code does not remove an employer’s obligation to comply with award consultation requirements in redundancy situations.
This is particularly important for employers covered by the Vehicle Repair, Services and Retail Award 2020 (Vehicle Award), which requires consultation when an employer proposes major workplace change, including redundancies.
Consultation must occur before the decision is implemented
The Vehicle Award requires employers to consult with affected employees about the proposed changes, discuss the likely effects of those changes, and consider measures to avert or mitigate adverse impacts.
Importantly, consultation is not simply informing an employee that their employment is ending. If a decision has effectively already been made and the employee is merely being notified, there is a real risk that the consultation obligation has not been met.
Failure to comply with these obligations can have significant consequences. Even where there is a legitimate business reason to reduce employee numbers, non-compliance with consultation requirements may result in a redundancy not being considered a “genuine redundancy” for the purposes of the Fair Work Act. This can expose employers to unfair dismissal claims and compensation orders.
What does this mean for MTA members?
Automotive businesses continue to face economic pressures, changing market conditions and restructuring requirements. While redundancies may sometimes be necessary, getting the process wrong can be costly.
Before making any decision to:
- Make an employee redundant;
- Restructure roles or departments;
- Reduce employee numbers;
- Introduce significant workplace changes that may affect employees;
contact the MTA Workplace Relations Team first.
We can help ensure that:
- Consultation obligations under the Vehicle Award are met;
- The business has considered redeployment obligations where relevant;
- The process is documented correctly;
- Risks of unfair dismissal or other claims are minimised.
The bottom line
The Orientile decision reinforces a simple but important message: consultation is not optional, and the obligation applies regardless of whether you are a large employer or a small family-run business. Employers should seek advice before commencing any redundancy process to ensure they remain compliant and avoid costly disputes.
Thinking about a redundancy or workplace restructure? Contact the MTA Workplace Relations Team before acting. A short phone call at the start of the process could save significant time, cost and risk later. We can be contracted via phone on 08 8291 2000 or by email: wr@mtasant.com.au
