The question of whether a redundancy is genuine was again put before the court in the recent decision of Penglase v Allied Express Transport Pty Ltd. This case is a reminder that employers cannot alter an employee’s position to the employee’s detriment in response to an employee’s illness or injury. The case also shows that in redundancy circumstances, employers need to have evidence that the business is undergoing a genuine restructure and that this redundancy was not for prohibited reasons.
This case involved an account manger with Allied Express Transport Pty Ltd (Allied Express) whose position was made redundant. The question before the Federal Circuit Court of Australia was whether the Account Manager, Teresa Penglase (Ms Penglase), had a valid claim for adverse action, discrimination or bullying in respect of Allied Express’ alteration of her employment due to her illness. Ms Penglase suffered from anxiety and stress disorder as confirmed by the company doctor.
Ms Penglase claimed adverse action, discrimination and bullying under the Fair Work Act 2009 (Cth) (FW Act). Ms Penglase claimed that:
- Allied Express breached s 340 of the FW Act as it:
- dismissed Ms Penglase because of her Workcover claim; or
- dismissed Ms Penglase because of her email of 7 December 2012 in which she claimed that she was being bullied and forced to resign;
- Allied Express breached s 351 of the FW Act as it discriminated against her because it:
- dismissed Ms Penglase because of her physical and mental disability; or
- altered her position to her prejudice, refusing to allow her to return to her normal duties;
- Allied Express breached s 352 of the FW Act as it dismissed Ms Penglase because of her temporary absence from work because of illness or injury; and
- Allied Express breached s 789FD of the FW Act as it bullied Ms Penglase.
For a claim in adverse action to be successful, the employee will need to prove that an employer took adverse action against an employee and that the action was taken because there was a relevant workplace right exercised. In these types of claims, there is a reverse onus that assumes the adverse action was taken for a prohibited reason unless the employer can demonstrate that it was not taken for that reason 1.
In this case the Federal Circuit Court had the role of determining why the employer took adverse action against the employee and whether such action was for a prohibited reason. The question here is one of fact which must be answered in light of all the facts established in the proceeding .
In respect of the adverse action claim the Court found on the evidence that Allied Express did not breach s 340 of the FW Act as Allied Express was undertaking a genuine restructure of its business. This restructure was undertaken in order to streamline the account management team and ensure experienced handling of customers. This restructure included the creation of a new position of Senior Account Manager / Business Development Manager which meant that the two less senior Account Manager positions were no longer necessary. The new position was at a much more senior level than that which had been occupied by Ms Penglase and had a much higher salary ($110,000 as opposed to $75,000).
The Court found that Allied Express had not breached s 340 of the FW Act as it had not dismissed Ms Penglase because of her Workcover claim or alternately because of her email of 7 December 2012 in which she claimed that she was being bullied and forced to resign. The dismissal was rather a legitimate redundancy because of a genuine restructure of the business.
The Court did find however that Allied Express breached s 351 of the FW Act as Allied Express had altered Ms Penglase’s position to her prejudice, refusing to allow her to return to her normal duties. Allied Express admitted that they had an “employee who was unwell and we were trying to offer them alternative positions that they could carry out during that period of time until they got well”. This evidence was taken by the Court as an admission that Allied Express had altered Ms Penglase’s employment to her detriment due to her illness and had therefore discriminated against Ms Penglase under s 351 the FW Act. The Court did not consider her employment had been terminated due to her temporary absence from work but rather it was due to the restructure and so there was no breach of s 352.
The Court applied a 10% discount to the maximum penalty as Ms McDowell (Managing Director of Allied Express) stated, although not convincingly, that the alteration of Ms Penglase’s employment was motivated solely by a desire to protect the health and welfare of the employee. The Court therefore imposed a penalty of $5,950 which was to be paid to Ms Penglase.
Ms Penglase also claimed that she was bullied when told her position was to be changed and that she had three options to choose between:
- perform a telephonist role with a reduced salary of $30,000pa;
- move to the position of Sales Executive with a significant increase in workload (no change in salary); or
With regards to this claim the Court found no evidence that Ms Penglase had been bullied pursuant to s 789FD of the FW Act. This is because there was no evidence that the employer “repeatedly behaved unreasonably towards the worker” and that this was a one-off occasion. Secondly, the Court did not consider that “that behaviour created a risk to health and safety” of the employee which, is another requirement for a breach of s 789FD of the FW Act.
Key lessons for employers
Employers will need to be careful when considering redundancies and ensure that they are legitimate redundancies which have resulted not only from a genuine restructure of the business but a restructure which was not decided by the business because of unlawful reasons. Any evidence of alterations to an employee’s role that is detrimental to an employee and in response to an employee exercising a workplace right may be considered a breach of the FW Act and the employer may be liable to penalties.
1 IEAU v AIAEI & Anor  FCCA 1308.
2 Board of Bendigo Regional Institute of Technical and Further Education v Barclay (2012) 248 CLR 500.