The Australian Industrial Relations Commission has pulled in the reins on unfair dismissal by overturning a previous decision relating to a redundancy case, says a Gold Coast solicitor.

Hickey Lawyers senior associate Nicole Campbell, who specialises in Work Choices, said the ruling meant employers now needed to be more careful when terminating staff.

The decision related to a case involving an employee of a major company who was made redundant during a restructure, which followed two hostile takeover bids and a multi-million dollar financial shortfall. 

The company claimed it was reducing costs by reducing employee numbers and made the employee redundant, but later re-advertised the position.  As a result, the employee argued the termination had not been for genuine ‘operational reasons’.

While the case was originally dismissed by the AIRC, a recent appeal was upheld by the full bench of the Commission and the previous decision overturned.

“This is a reminder for employers that they need genuine reasons for dismissing staff,” said Ms Campbell.

“The AIRC has the power to step in and has shown it is not only willing to do so, but also willing to be very strict about ensuring the reasons behind the termination are valid.”

Ms Campbell said ‘operational reasons’ were traditionally known as ‘redundancy’, but changes to workplace legislation had given employers more scope to dismiss staff using the defence.

“Under new legislation, employers only need to show that ‘operational reasons’ were one of the reasons for the termination of employment,” she said.

“Operational reasons may include closures, loss of substantial contracts, financial strain or restructures and, if the employer can prove this was only one of the reasons behind the termination, then the employee has no rights to claim unfair dismissal.

“As this case showed, the AIRC has the power to make the ultimate decision on whether a ‘real, true or authentic’ operational reason is a factor in a dismissal.

“Employers need to step up and ensure they do have solid grounds for letting staff go, otherwise they could find their decisions being assessed by the AIRC.”

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