Sham Redundancies by Kate Ausden

Kate Ausden Blog

A “small business”, as defined by the Fair Work Act 2009 (“the Act”), has less than fifteen employees and is treated differently to larger employers under the Act in some circumstances.

For example, provided a small business complies with the Small Business Fair Dismissal Code, the redundancy offered is genuine (as defined by the Act) and the small business employer complies with all other requirements of the Act, Awards and otherwise, the small business will not need to pay a statutory redundancy to the employee.


The Fair Work Commission has put small business employers on notice by ordering that a small business pay a worker almost $15,000 because she was not offered a genuine redundancy, rather it was a mere sham to dismiss her.

The employee was a permanent part-time employee performing the role of an Assistant Property Manager at a real estate agency. She was the mother of three children and needed a degree of flexibility.

The employer informed the employee that her current role was to be made redundant and was to be replaced by a permanent role performing, apparently, the same duties. The business reason for the redundancy was to increase “the level of service provided and time dedicated to the property management department.”

It was held that:

• the employer failed to consult with the employee by failing to provide her with relevant details about the new role;

• the employer failed to consult with the employee by failing to consider her family responsibilities and whether the job description could be changed (for example, could the employer have considered “job sharing”);

• the employer did not send proper correspondence about the consultation process to the employee (the purpose, outcome, parameters of and timeline for the discussion were not detailed sufficiently); and

• the process was not ‘genuine’ in that the employee was offered a role she would almost certainly reject given her family circumstances and lower pay.

It was held that it was not a case of genuine redundancy.

Employers need to be aware of consultation obligations, in particular, small business employers. Consultation is a genuine process and there should be “a bona fide opportunity to influence the decision maker.”

Employers need to be aware of what circumstances give rise to a genuine redundancy including, the job is now done by a machine, there is a downturn in business (less people need to do the same job), restructuring for efficiency (the job duties will be distributed amongst existing employees).

Sarah Cruise v Baxter Cassidy Pty Limited T/A Ray White Langwarrin [2019] FWC 1751 (19 March 2019)