Fair Work Commission orders engineering business to reinstate redundant workers

An Australian engineering services company has been ordered to reinstate three workers it made redundant, and pay them close to $200,000 in compensation, after the Fair Work Commission found the company did not do enough to redeploy the workers within other areas of the company.

In a ruling handed down last week, the commission found Downer EDI’s retrenching of three coalmine workers was “unreasonable and harsh” and, therefore, the three workers were unfairly dismissed.

The three men lost their jobs as part of a retrenchment of 106 workers from a coalmine at Boggabri in NSW, which Downer EDI operates on behalf of Idemitsu Australia Resources.

The commission found the redundancies were “non-genuine redundancies”, as although the company was winding down production at the mine where the workers were employed, the company began advertising for the same roles just two months later.

The commission also found the company failed to “reasonably redeploy” each of the workers and that the firm did not have protocols in place to help retrenched workers find alternative work.

Commissioner Ian Cambridge ordered Downer EDI to reinstate the workers, despite some evidence there are presently no vacant positions at the mine, and pay each of them compensation, ranging from $40,437 to $86,170.

Andrew Douglas, lawyer at M&K Lawyers, told SmartCompany the case shows “if you make someone redundant, particularly skilled workers, you have an obligation to see if there are suitable redeployment opportunities within your divisions and not just at the location where they worked”.

“The employer in this case failed to look at suitable redeployment in other divisions of the company, contrary to its legal obligations,” says Douglas.

Douglas also labelled as “farcical” the company’s argument that “because the employees, after being made redundant, did not seek employment outside the geographical area, somehow this showed they met their obligations”.

“The second issue underpinning this case is that a desire to introduce a redundancy program, which two months later is seen to be utterly flawed, is always going to be subject to criticism,” says Douglas.

Douglas says businesses “must take a longer term view” and “reflect carefully on future circumstances before considering such a deep cut in employment”.

“Within a short term after cutting such a large number of workers, the company was seeking to advertise and employ other workers, which was a curiosity. From that point the court was always going to look favourably on claims by employees,” he says.