Redundancy Series: Consultation lessons from ASU v Auscript Australasia

The failure to comply with consultation obligations can have serious ramifications for an employer attempting to implement redundancies. It can result in the Fair Work Commission (FWC), Australia’s employment tribunal, issuing orders which delay or prevent the implementation of redundancies, leading to significant cost and disruption within the business and the workforce.

In the third part of this redundancy series, we review the decision of ASU v Auscript Australasia Pty Ltd[1] and set out its key lessons. As noted in our previous alert, the second limb to a genuine redundancy under the Fair Work Act 2009 (Cth) (the Act) requires employers to comply with any applicable obligation in a modern award or enterprise agreement to consult about the redundancy. Consultation is a critical part of understanding any genuine redundancy, as covered in our first alert in this series.

While the case of ASU v Auscript Australasia Pty Ltd considered the particular provisions of an applicable instrument, this case is relevant to all consultation obligations, including the need to consult with employee representatives (eg trade unions) where there will be the termination of the employment of 15 or more employees.

In early 2020, Auscript made the decision to implement 25 redundancies due to closures (or partial closures) of its offices in Adelaide, Sydney and Hobart. The decision was made without consultation with affected employees or their representatives, the Australian Municipal, Administrative, Clerical and Services Union (ASU). In response the ASU and Auscript agreed to develop a ‘Protocol’ to ensure Auscript’s future actions complied with the consultation obligations under the applicable industrial instrument, being the Auscript Australasia Enterprise Agreement 2010.

Later in 2020, Auscript sought to implement further redundancies due to the impacts of COVID-19 on its business. As part of the consultation period necessary to implement these redundancies, Auscript met with the employees, stood them down with pay and asked employees to inform Auscript whether they would opt for voluntary redundancies.

The ASU took the dispute to the FWC, alleging that Auscript had failed to genuinely consult about the redundancies. Conciliation conferences were held between the ASU and Auscript, conducted by the FWC. However, no agreement was reached as to the implementation of the redundancies. Auscript sought to press ahead with its proposals.

The FWC found that Auscript had not genuinely consulted with employees and not genuinely participated in the conciliation before the FWC. In ordering Auscript to resume consultation with employees and their representatives, the FWC determined that Auscript had not given “genuine consideration” to options other than redundancy and had failed to consult in accordance with the terms of the industrial instrument.

In particular, the FWC took issue with Auscript adopting an approach which the FWC found was to consider the consultation period a “mere formality”. The FWC noted also that the context of the COVID-19 pandemic was relevant and that Auscript had an “obligation to treat staff with dignity in this time of crisis”.

The two key lessons from this decision are:

• consultation must be genuine, thoughtful and implemented with genuine regard to the input of employees, and their representatives; and
• employers must be aware of the need to consult with trade unions, whether that obligation arises from an industrial instrument or from the operation of section 531 of the Fair Work Act 2009 (Cth).

The DLA Piper employment team has extensive experience in assisting employers with the redundancy process. Please don’t hesitate to reach out to our team who would be more than happy to discuss this topic with you.