18 January, 2018
Sensis Pty Ltd v Gundi [2017] FCA 1519
What you need to know
The Federal Court of Australia has found on appeal that a sales employee's position was not made redundant when the mix of customers which the employee was required to sell to was changed by his employer.
The appeal overturned a decision of the Federal Circuit Court. The first instance decision had found that the employee's role was redundant because his responsibilities of looking after a pool of existing clients were redistributed amongst other employees and his new position required him to devote full-time hours on an activity which, on the employee's evidence, previously comprised approximately 30 minutes a week.
This decision considers terms commonly used in redundancy clauses such as "position", "reasonable alternative position" and "suitable position". The decision illustrates the importance of considering such terms in the context of the relevant instrument. The reasoning in this decision may be broadly applicable to most employers, if their definitions of redundancy are similar to that under consideration here.
What you need to do
If changes are proposed to an employee's role, consider whether there is a redundancy within the meaning of the terms in the employee's contract, relevant policies and any applicable industrial instrument.
What was the case about?
The employer employed a Media Sales Advisor to sell advertising services. The position description for this role required the employee to retain and grow a portfolio of clients. The employer expected that 20% of the employee's time should be spent on actively sourcing and maintaining new business. The employee spent the majority of his time selling services to existing clients and about half an hour per week on growing and retaining new business.
In early 2016, the employee was given a new position description, which placed a greater emphasis on the employee acquiring as many new business opportunities as possible. The employee's commission structure was also altered to reflect this. The changes also meant that the employee would no longer have a portfolio of 160-170 existing customers allocated to him.
The employee considered the changes to his position description were a demotion and he believed he would experience financial loss as a result of the change in the commission structure.
The employee commenced proceedings in the Federal Circuit Court, arguing that his role had been made redundant and that he was entitled to a redundancy payment under the relevant enterprise agreement. The employee also asserted that a penalty should be imposed on the employer because it had contravened the enterprise agreement and so had breached section 50 of the Fair Work Act 2009 (Cth).
Was there a redundancy?
The employee's redundancy entitlements were contained in the relevant enterprise agreement. The redundancy clause provided that an employee's position was redundant if the employer no longer required the "position" to be done by anyone because of changes in the employer's operational requirements. The clause also required the employer to take steps to redeploy the employee to a reasonable alternative position. Redundancy pay would not be paid to an employee where an employee was redeployed or where the employee did not accept an offer of a suitable position.
At first instance, the Federal Circuit Court accepted that there was no change to the employee's title, location, classification, salary, reporting line, or commission opportunity. However, the Federal Circuit Court found that the employee's position had been made redundant because his responsibilities (and the portfolio of 160-170 clients) had been redistributed amongst other employees and so his position no longer needed to be performed.
The Federal Court overturned this decision on appeal, finding that the employee's position had not been made redundant. The question to be asked was whether there was a redundancy within the meaning of the terms of the enterprise agreement. So, in this case, the question was whether the Media Sales Advisor position was no longer required to be done by anyone due to changes in the operational requirements of the business. The Federal Court concluded that the employee's previous position and new position both required him to sell advertising services to new and old customers. The only difference between the two roles was the mix – or combination – of these customers. So, it could not be said that the position was no longer required to be done by anyone because of changes in operational requirements.
What if the role was redundant?
The Federal Court confirmed that if the employee's role was redundant, the onus was on the employee to prove that he was entitled to a redundancy payment because he had not been offered a "reasonable alternative position" or "suitable position", as those terms were defined in the enterprise agreement.
The Federal Court found that the primary judge should have concluded that the role reflected in the new position description was a "reasonable alternative position" and a "suitable position" within the meaning of those terms in the enterprise agreement. This meant there was a further basis as to why the employee was not entitled to a redundancy payment.
Making the case: Insights from Geoff Giudice
An interesting aspect of the case concerns the onus of proof. The Federal Circuit Court had originally decided that, if the employee could prove redundancy, the employer would be liable for redundancy benefits unless it could prove in turn that it had offered the employee a reasonable alternative position or a suitable position (terms contained in the enterprise agreement). The Federal Court found that this approach was wrong and that the onus was on the employee to persuade the Court, not only that his position was redundant, but also that he had not been offered a reasonable alternative position or a suitable position. In other words, the Federal Court found that the onus of proof remained on the employee in relation to all aspects of his claim.
For further information, please contact:
Vince Rogers, Partner, Ashurst
vince.rogers@ashurst.com
