A recent decision of the Fair Work Commission sheds further light on multinational companies’ obligation to consider overseas employment options for employees affected by redundancy.
In Roy v SNC-Lavalin Australia Pty Ltd  FWC 7309 Senior Deputy President Richards found that SNC-Lavelin Australia Pty Ltd (SNC), which is part of a multinational employer group, had complied with its obligation to consider reasonable redeployment options. This was despite the fact that the company declined to employ an employee in a position available overseas when making employees in its Brisbane office redundant.
SNC experienced a downturn in its Australian and international operations in 2012. As a result, in August of that year it commissioned a review of its operations which, among other things, was designed to identify how effectively employees were being utilised across the company.
Mr Roy was employed in the Brisbane office as a “senior designer – mechanical”. The Brisbane office was particularly affected by the downturn with utilisation levels having fallen to a five-year low. SNC identified that Mr Roy would be underused from December 2012 when the project on which he was working would be completed.
SNC initiated a program of cost-cutting and redundancies. Between August 2012 and March 2013, its Brisbane office reduced its staff from 156 to 71. This included making all senior designer – mechanical staff positions redundant.
Consequently, on 1 March 2013, Mr Roy’s employment ceased on the grounds of redundancy.
Mr Roy alleged that, at the time of his dismissal, there were a large number of overseas positions to which he could have been redeployed.
These specifically included:
CADD designer in Marlborough, Massachusetts, USA;
CAD technologist in Calgary, Canada;
project leader, mechanical and piping in New Caledonia; and
engineering assistant in Toronto, Canada.
Further, Mr Roy alleged an employee of SNC had told him there were “plenty” of jobs in Canada.
Though SNC was not itself the employing entity at these overseas offices, it was related to each by being part of a broader corporate group. SNC rejected the contention that there were “plenty” of jobs available in Canada. Evidencing this, SNC produced minutes of a meeting of global human resources representatives dated 28 March 2013 which demonstrated that over 600 employees had been made redundant at the Toronto office.
SNC also said it had attempted to redeploy Mr Roy in an Australian position but there were simply no suitable positions available.
Mr Roy alleged that his dismissal was unfair under section 394 of the Fair Work Act 2009 (FW Act).
A dismissal cannot be considered an “unfair dismissal” under the FW Act if it is a “genuine redundancy” as defined in section 389 of the Act. In this case, this provision required consideration of two main tests:
whether the employee’s job was no longer required to be performed; and
whether it would have been reasonable to redeploy the employee in the employer’s business or with an entity associated with the employer.
There was no controversy that Mr Roy’s job was no longer required to be performed. All senior designer – mechanical positions had been abolished in SNC’s Brisbane office and in overall terms the Brisbane office had experienced a 50 per cent decrease in staff numbers.
The real issue in this case was whether SNC could have reasonably redeployed Mr Roy, either in Australia or overseas.
Employment opportunities within Australia were very limited. SNC was going through a downturn in which it was getting no new work or contracts. In addition, there were no vacancies arising from SNC’s work under existing contracts.
SNC continued to employ people in positions more junior to Mr Roy’s former role as a senior designer – mechanical, but Richards SDP was of the view it would not have been reasonable to remove an incumbent employee to accommodate Mr Roy.
On the other hand, a number of positions were available overseas. This gave rise to the question – could Mr Roy have been redeployed to an international location such as the US or Canada?
Leaving aside the question of whether Mr Roy had the requisite qualifications, skills and experience for any available position, Richards SDP made some interesting high-level observations on the matters to be considered in determining whether it is reasonable to redeploy an employee overseas.
Richards SDP addressed the basic structural features which must exist before the employee’s suitability for particular overseas positions is considered. Where these structural elements are absent, there may be no need to compare an employee’s skills, qualifications and experience against any individual positions available overseas.
The first of these is that there be an established and formal process or policy by which international redeployment can be effected. As an evidentiary matter, it is not sufficient that employees often apply for, and meet, the requirements of an overseas office, resign from their local employment, and then relocate overseas at their own expense. Informal assistance from employers is not enough to establish the existence of a formal process or policy for effecting redeployments.
At the very least, an employee would need to be able to prove that their employer “held out” that it had a formal process or policy for effecting redeployments.
Second, it will generally not be considered reasonable to redeploy an employee overseas where the employer lacks any centralised authority over overseas offices. This is very often the case in large corporate groups where human resource functions are decentralised and vested in individual subsidiary entities in each jurisdiction. This devolution of authority means that one office cannot simply direct or compel another office located overseas to accept any individual for employment.
Where a local employer lacks any overriding central management control over overseas offices, “it is not reasonable ... to redeploy ... to an overseas location to take up a new position in such circumstances”.
In SNC’s case, neither of these two structural elements was found to be present.
In addition, Richards SDP identified a number of other variables that need to be considered in order to determine whether redeployment is a reasonable option. These include the costs of relocating the employee from one country to another, training the employee to fit relevant job requirements and any language- related training.
In the circumstances of the case, it was also readily apparent that none of the jobs available internationally were suitable options for the redeployment of Mr Roy. In each case, there was a factor rendering them unsuitable, specifically:
- CADD designer: there was an urgent requirement to fill this position and hence preference was given to local candidates;
- CAD technologist: local candidates were again preferred for this position;
- project leader, mechanical and piping: this position required proficiency in French, written and spoken; and
- engineering assistant: the position required a college diploma but Mr Roy had no diploma or degree-level qualifications.
There is a dearth of case law relating to the circumstances in which international redeployment options will be considered reasonable. Indeed, this decision refers to no other case law which is directly on point. This is somewhat surprising in light of the large number of Australian employers that operate across national borders in this age of globalisation.
At any given time, there may be a number of jobs available at overseas offices operated by entities related to or affiliated with an Australian employer. This decision establishes that it will only be necessary to consider international options for redeployment in certain circumstances. Basic questions about structure need to be considered such as whether the employer has a formal overseas relocations policy and whether the employer has central management control over the relevant overseas office.
It is only after these matters are addressed that the task of assessing the employee’s skills, experience and qualifications against the available positions needs to be undertaken.
This article was first published in the Law Society Journal, December 2013