Redundancies unreasonable, as insourcing contracted work was feasible redeployment

Redundancies unreasonable, as insourcing contracted work was feasible redeployment

Redundancies unreasonable, as insourcing contracted work was feasible redeployment

 

A Full Bench of the Federal Court has affirmed earlier decisions that a group of miners who were made redundant were, in fact, terminated and that their employer erred in not offering them job opportunities held by contractors.

US resources giant Peabody Energy operates the Helensburgh Mine, an underground mine situated near Helensburgh, New South Wales. The bulk of the workforce is directly employed by Helensburgh Coal Pty Ltd (Helensburgh Coal).

On 1 August 2018, Nexus Mining Pty Ltd (Nexus) was engaged under a two-year ‘Major Services Agreement’ to provide various services at the mine. In early 2019, another company, Mentser Pty Ltd (Mentser), was engaged to undertake an inspection of the mine’s conveyor system following a fire.

Menster was subsequently engaged to undertake servicing, inspections, audits and rectification of the conveying systems on an outsourcing basis.

During the 2020 pandemic, demand for the type of coking coal processed at the mine fell significantly, and Helensburgh Coal advised its employees and the union that they were required to reduce their workforce numbers.

The unions initially requested that the company reduce its reliance on contractors (as provided by Nexus and Mentser), but no agreement was reached.

Ultimately, a restructure occurred, resulting in a reduction of both contractors and direct hire employees. Although some workers accepted redundancy packages, twenty-three Helensburgh Coal employees did not and submitted unfair dismissal applications.

In hearings before Commissioner Bernie Riordan, the employees collectively claimed that their dismissals were not cases of genuine redundancy.

Their primary argument was that it would have been reasonable for their employer to redeploy each of the employees to roles or positions that were being undertaken at the mine by employees of Nexus and Mentser.

Commissioner Riordan agreed with their submission that it would have been reasonable to reduce the work available to contractors and to redeploy the redundant employees to their roles.

He accepted the argument despite evidence that none of the employees had undertaken the specific work of the contractors, additional training would have to be offered, operating costs would increase, and Helensburgh Coal would have to increase their supervisor numbers.

On appeal, a Full Bench substantially supported the employee’s position.

The Full Bench of the Federal Court endorsed earlier appeal comments that the Commissioner,

“considered whether insourcing the contracted work was feasible and the skills of the employees seeking redeployment and whether the employees had the skills necessary to perform that work before reaching the conclusion that redeployment was reasonable in all the circumstances”.

In their view, Commissioner Riordan correctly exercised his discretion in acting on the employee’s submissions concerning the company’s decision.

Helensburgh Coal Pty Ltd v NB [2024] FCAFC 45 (5 April 2024)

For queries about restructures, redundancy, or other employment questions, please contact Dean Cameron at Workforce Advisory Lawyers – We Know Employment Law on 1300 925 529, 0417 622 178 or via email to dean.cameron@workforceadvisory.com.au

Disclaimer: This information is provided as general advice on workplace relations and employment law. It does not constitute legal advice, and it is always advisable to seek further information regarding specific workplace issues. Liability limited by a scheme approved under professional standards legislation.

Ref: 435.0524

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