Equal Employment OpportunityTermination

Case Note: The Power of Redeployment in a Redundancy Context

Adcock v Blackmores Limited & Ors [2016] FCCA 265

Background

This case concerned an application by Mr Adcock, the former Commercial Manager (Asia) of Blackmores Limited (“Blackmores”) a publicly listed company which produces and sells a range of natural healthcare products, who sought compensation in excess of $140,000 on the basis that his employer dismissed him by refusing to recognise that his position was redundant and had repudiated his contract of employment by failing to pay him redundancy entitlements under an enterprise agreement. In addition, Mr Adcock claimed that Blackmores’ HR personnel knowingly or otherwise reckless misled him as to his workplace rights, namely that he was entitled to redundancy pay.

Mr Adcock submitted to the Federal Circuit Court of Australia that Blackmores, in addition to its express contractual obligations, owed implied duties to him including to exercise any decisions:

  1. in good faith;
  2. reasonably;
  3. with proper regard to his interests;
  4.  in a manner that was not capricious, arbitrary or unreasonable; and
  5.  fairly and impartially.

Mr Adcock claimed that in a meeting in July 2014, he was informed that his role would be impacted as part of Blackmores regional reorganisation to its business and his responsibilities would be allocated elsewhere. Mr Adcock was offered other alternative roles within the business. Mr Adcock subsequently informed Blackmores that he would not be accepting any of the alternative positions suggested to him for redeployment and requested calculations of his termination and severance entitlements.

Discussion

Justice Cameron observed that the evidence was uncontroversial insofar as Mr Adcock’s role being made redundant because it was abolished as part of a corporate restructure by Blackmores.

However, the evidence further demonstrated that Blackmores offered Mr Adcock numerous options for redeployment, including a Financial Controller role and Business Implementation Manager position among others, none of which he accepted, despite Mr Adcock conceding was part of the significant efforts by his employer to retain his services.

Despite the exploration of several redeployment options, Mr Adcock requested payment of his termination and severance benefits on the basis that none of the alternative roles suggested by Blackmores were acceptable to him. The Court noted that Blackmores, however, offered Mr Adcock a number of acceptable alternative positions which he declined. At trial it was conceded by Mr Adcock that these roles were genuine job offers which he could have performed.

Findings

One of the major issues in these proceedings was whether Blackmores dismissed Mr Adcock by what was alleged as repudiatory conduct by making his position redundant, amounting to a constructive dismissal. It was ultimately found by the Court that Mr Adcock failed to prove that the redundancy of his position, without more, amounted to the termination of employment. Mr Adcock did not seek to prove that the alternative positions offered to him were not suitable and as such amounted to repudiatory conduct on the part of Blackmores.

The Court rejected Mr Adcock’s claim that his employment was terminated by Blackmores’ action in making his role redundant. In essence, Justice Cameron found the Commercial Manager repudiated his own contract by telling Blackmores in September 2014 that he would no longer be attending for work thereby effectively abandoning his employment. The Court found that in circumstances where a contract of employment allowed for a change of duties, and an employer offers an employee alternative roles on the redundancy of the role they were previously performing, the redundancy of that role on its own is insufficient to amount to a termination of employment. It was open for Blackmores to make Mr Adcock’s role redundant and offer suitable alternative employment. The court found that it was Mr Adcock’s refusal to accept the alternative roles and not attend for work that brought the contract of employment to an end.

Further, the Court found that Mr Adcock was not misled as to his workplace rights and dismissed the application against Blackmores.

Learnings

Of notable relevance in this case is the fact that the process of genuine redeployment and the provision of suitable alternative roles being offered to Mr Adcock essentially prevented a finding against Blackmores that the mere redundancy of his position triggered dismissal and breach of his employment contract. This is significant as under section 120 of the Fair Work Act 2009 (Cth) an employer can apply to the Fair Work Commission for an order to reduce the amount of redundancy pay to an employee (including to nil) in circumstances where suitable alternative employment has been offered as part of a restructure.

The case also highlights the need for properly drafted employment contracts allowing an employer to alter the position and duties of its employees. In this case the existence of such a clause meant that the Court was unable to conclude that the redundancy of Mr Adcock’s role automatically meant the employment came to an end, given it was able to change his position and duties, which it sought to do.

Following last week’s client alert regarding change management and making redundancies in an unstable economy, this important decision serves as an important reminder to employers to genuinely consider and fulfil their redeployment obligations.

This alert is not intended to constitute legal advice. If you have an employment law issue, please do not hesitate to contact us for specialist advice or assistance.

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