Unfair Dismissal and Genuine Redundancy: Janus v Red Star Gold Coast Pty Ltd

Employment disputes can often hinge on technicalities, with the line between lawful redundancy and unfair dismissal being particularly nuanced. In the case of Janus v Red Star Gold Coast Pty Ltd, a couple employed as motel managers found themselves out of work following a restructuring of the business. However, they believed their dismissal was not due to a genuine redundancy but rather was an unfair termination that did not follow the proper legal processes.

Factual Background

The applicants, Mr. Jason Janus and Mrs. Marianna Janusova, were employed by Red Star Gold Coast Pty Ltd as Motel Managers at one of the company's properties. Their employment began on 24 January 2023. On 1 September 2023, their employment was abruptly terminated, and they were made redundant, allegedly due to business restructuring, a decline in revenue, and increased operational costs.

The couple challenged the redundancy, claiming it was not genuine. They argued that other employees were still performing their duties and that they had not been properly consulted about the redundancy process as required under the Fair Work Act 2009 (Cth). They further stated that they would have accepted redeployment to another role if offered. These circumstances led the applicants to seek a remedy for unfair dismissal under section 394 of the Act.

Issues for the Court

The key legal issues the Fair Work Commission needed to address were:

1. Whether the applicants' dismissal was a genuine redundancy as defined under section 389 of the Act.
2. Whether the employer had complied with its obligations to consult the employees regarding the redundancy process, as required under the applicable modern award.
3. Whether it would have been reasonable, in all the circumstances, for the applicants to be redeployed to other roles within the company or its associated entities.

Commission's Analysis of the Issues

1. Was the dismissal a case of genuine redundancy?

Under section 389 of the Act, a dismissal is considered genuine redundancy if:

• The employer no longer requires the role to be performed by anyone due to changes in operational requirements;
• The employer has complied with any obligations to consult employees under the applicable modern award or enterprise agreement; and
• It would not have been reasonable to redeploy the employee within the employer’s enterprise or an associated entity.

The Commission looked at whether the applicants' roles were genuinely redundant. The employer argued that the business was experiencing financial difficulty and needed to restructure. Due to the renovation of the motel and declining profits, the employer decided to centralize some management functions to its head office in Sydney. The employer attested that the duties performed by the applicants were either absorbed by other staff members in Sydney or were no longer required at the property.

The Commission agreed with this assessment, noting that the role of Motel Manager was no longer necessary at the Gold Coast property and that no one had replaced the applicants in that role.

2. Did the employer fail to consult the employees?

The next issue involved the employer’s obligations under the Hospitality Industry (General) Award 2020, which governed the employment of the applicants. The Award contains provisions requiring employers to consult with employees about major changes in the workplace that could lead to redundancy. These consultations must give the affected employees an opportunity to discuss the changes, provide feedback, and potentially explore alternatives to redundancy, such as redeployment.

In this case, the employer acknowledged that no formal consultation took place. The applicants were informed of their redundancy on 1 September 2023, the same day they were terminated. The Commission noted that this violated the consultation obligations under the Award, which required a genuine discussion with the employees before a final decision on redundancy was made. The Commission held that this failure to consult made the redundancy process procedurally unfair.

3. Could the applicants have been redeployed?

The Act also requires employers to consider whether it would be reasonable to redeploy the dismissed employees into another role within the company or an associated entity. The applicants argued that they could have been redeployed to caretaker or receptionist roles, positions that remained available even after their redundancy.

The Commission examined whether any such roles existed at the time of the applicants’ dismissal. While the applicants presented evidence of job postings for Motel Manager roles within the company, the Commission noted that these postings were for future vacancies and were not available at the time of their dismissal. Additionally, the available roles, such as casual caretaker or receptionist, were part-time or casual, and not equivalent to the full-time Motel Manager position previously held by the applicants.

Ultimately, the Commission found that redeployment was not a reasonable option, as there were no equivalent positions available at the time of their redundancy.

Commission's Findings

The Commission ultimately concluded that the applicants had been made genuinely redundant based on operational requirements. However, the dismissal process was procedurally flawed because the employer failed to properly consult with the applicants as required under the applicable modern award.

As a result, the Commission found that the dismissal was unfair, not due to the redundancy itself, but because the employer did not comply with its consultation obligations. The Commission did not initially make a final ruling on the remedy for the applicants, as further hearings were needed to determine whether reinstatement or compensation was the appropriate remedy.

On a later date, the Commission determined that redeployment would not have been reasonable under the circumstances. Although the applicants argued they could have performed various roles, such as reception or maintenance duties, the Commission found that these positions were either not suitable or not available at the time of their dismissal. Furthermore, the significant reduction in remuneration and the lack of available on-site accommodation made redeployment impractical.

The Commission also considered the evidence provided by both parties concerning the applicants' ability to perform other roles within the company. It was noted that while Mr. Janus might have been able to take on a maintenance or reception role, it would have come with a considerable loss of pay and benefits, including the live-in accommodation that was part of his previous role. Similarly, Mrs. Janusova's ability to undertake alternative roles was questioned, particularly given her recent absence to care for a family member and her reduced involvement in the managerial role at the time of her redundancy.

Ultimately, the Commission ruled that reinstatement was not an appropriate remedy, as the Motel Manager position was no longer required. As a result, the Commission awarded compensation in lieu of reinstatement, amounting to $2,496.10. This figure accounted for the applicants' wages, accommodation benefits, and utilities they would have received had they been properly consulted about the redundancy. The compensation was calculated based on one week’s salary, as the Commission found that consultation would not have changed the outcome of the redundancy process. The Commission also acknowledged the applicants' efforts to mitigate their financial loss through the operation of their gelato business but found that this did not significantly affect the compensation awarded.

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 This case serves as an important reminder for employers to strictly adhere to consultation requirements when making employees redundant. Even if the redundancy itself is legitimate, a failure to consult employees can result in an unfair dismissal finding. This case also highlights the need for employers to consider all reasonable redeployment opportunities before terminating an employee’s role.

For employees, it underscores the importance of understanding their rights under the relevant modern award or enterprise agreement and ensuring that proper procedures are followed before any dismissal occurs.