Flexible work arrangement in Japan no barrier to redundancy

In a recent decision[1], the Fair Work Commission has found that an employee working under a flexible work arrangement in Japan did not prevent the termination of his employment being a “genuine redundancy”. In doing so, the Commission also laid down some useful principles for employers contemplating redundancies.

Facts

When the applicant's employment ended by way of redundancy in June 2024, he was working remotely in Japan pursuant to a flexible work arrangement. The applicant’s role was as a Search Engine Optimisation (SEO) executive.

Following a review of the SEO team, the respondent employer decided it no longer required the applicant’s role to be performed by anyone. It determined they needed a more senior role in the SEO team: an SEO Manager. Consultation meetings then occurred with the applicant, including regarding his potential redeployment to another role.

When his employment ended, the applicant contended his redundancy was not “genuine” because, among other things, his employment was terminated during the term of his flexible working arrangement.

Decision

The “genuine redundancy” exemption applies in an unfair dismissal application where:

• the employer no longer requires the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise;
• the employer has complied with any obligation in a modern award or enterprise agreement to consult about the redundancy; and
• it would not have been reasonable in all of the circumstances for the person to be redeployed within the employer’s enterprise or the enterprise of an associated entity.

The Commissioner noted that operational issues in a business can arise at any time and the fact that the applicant was on a flexible work arrangement in Japan did not make him immune from his role ending by way of redundancy. The Commission found the respondent no longer required the role to be performed by anyone because of changes in its operational requirements.

The applicant had applied for the SEO Manager role and was unsuccessful because the respondent determined the applicant lacked the requisite skills and experience (with the applicant’s performance as an SEO executive stated to have not been proficient). The Commissioner found that it would not have reasonable in such circumstances to redeploy the applicant to the SEO Manager role.

No issue arose as to failure to consult with the employee about the redundancy because the employee was an “Award/Agreement free” employee.

The Commissioner therefore dismissed the application and found the “genuine redundancy” exemption applied.

Useful principles

The Commission laid down some useful principes regarding redundancies:

• The phrase “operational requirements” is extremely broad. It is not confined to a situation where a business has excess labour, is running over budget, is unprofitable, losing customers or where revenue is down.
• The Commission referred to a decision of Lee J in Nettlefold v Kym Smoker Pty Limited (1996) 69 IR 370 where it was said that “operational requirements” encompass changes arising from both internal and external forces, such as the past and present performance of the business, the state of the market in which the business operates and steps that can be taken to improve the efficiencies of the business, such as implementing new processes, equipment or skills.
• Changes to operational requirements, might also arise because an efficient and/or profitable business desires to become more even efficient and/or profitable.
• The nature and extent of any modifications to a business that might be required because of changes in its operational requirements are broad and matters of managerial discretion. The fact that others, such as employees, might consider a particular decision to be wrong is not to the point. It is not the role of the Commission to stymie or interfere with operational decisions made on a bona fide basis within the broad bounds of managerial discretion.

Conclusion

Whilst this decision is useful to employers who are considering redundancies, care still needs to be exercised by employers to ensure that they can meet the “genuine redundancy” exemption. Often the main issue when implementing redundancies is whether it is reasonable to redeploy the employee to other available roles, including that of associated entities. That can be a vexed issue for employers and one they should take advice on.