Was redundancy an unfair dismissal?

A woman who was made redundant without prior consultation by her employer, a hairdressing salon, has failed to convince the Fair Work Commission (FWC) that she was unfairly dismissed.

 

Facts of case

The woman was called into a meeting after being told it was to investigate allegations of serious misconduct. The meeting request told her to bring her work keys and work equipment to hand over at the meeting. 

The misconduct allegations were:

• On social media, she referred to a customer as “a selfish brat and subhuman”, adding that management “knew about it”.
• She was “rude and demeaning” to a client, who complained to management.

The employer claimed that these alleged incidents damaged the reputation and viability of the salon.

After the meeting, the employer terminated her employment, but described it as redundancy due to business downturn. The employer submitted a letter to the FWC from its Accountant, which had advised it to make an employee redundant. The employer also claimed that it made the employee redundant instead of dismissing her, because it gave the employee a better financial outcome. But, contrary to the allegations of serious misconduct, the salon manager claimed that otherwise it would have continued the employee’s employment.

The FWC had to decide whether there had been a genuine redundancy, or whether the employee was dismissed – and if the latter, whether unfairly.

Although there was no consultation with the employee about possible redundancy (as her award required to occur), the FWC said that the obvious financial downturn in the business meant that, even if there had been consultation, her employment would still have been terminated. Because it was a very small business (only one manager and one employee), redeployment was not an option. However, because the employer failed to meet its consultation options, there was not a genuine redundancy. 

 

Decision

Although the employer had concerns about possible misconduct by the employee, it did not take that into account when terminating her employment, relying solely on financial pressures. 

Therefore, although consultation provisions were not met, the employee’s employment would have ended anyway for business financial reasons, the latter providing a valid reason for termination. Therefore, the employee’s claim of unfair dismissal failed.

What this means for employers

In this case, clear financial necessity to reduce staff overrode the requirement to consult with the employee, because her employment would have ended anyway. However, it is recommended that employers still comply with any consultation requirements that do apply (eg in an award) to avoid the possibility that a finding of unfair dismissal due to procedural errors could result in an employee’s payout being increased.

 

Read the judgment

Mrs Barbara Louise Exton v A&S Creative Style Pty Ltd - [2024] FWC 1681 | Fair Work Commission