02 Jun 2014

Reasonable overseas redeployment: final destination or mirage?

by Abraham Ash, Sadaat Cheema

Although a claim for international redeployment is easily made, at this stage it appears at best a theoretical possibility rather than a practical reality.

Under the Fair Work Act 2009 (Cth), an action for unfair dismissal cannot be maintained where termination of employment satisfies the “genuine redundancy” exemption. One of the key elements of the genuine redundancy exemption is that the employer undertook reasonable steps to redeploy the employee within the employer’s enterprise or within an associated entity. This particular element implies a positive obligation upon employers to search for, identify and ultimately offer to employees suitable alternative roles, if they are available.

One issue that has arisen in a number of recent decisions of the Fair Work Commission is the extent to which employers are required to consider overseas roles for redeployment. Many employers have overseas offices and branches, or may be associated with entities operating off-shore.

This article will discuss Roy v SNC-Lavelin Australia Pty Ltd  [1] , the first case to consider the issue, as well subsequent decisions.

Although the reasons have differed in each case, an underlying pattern does emerge. It is difficult to successfully argue that an employee should have been redeployed overseas. Relocation costs, differences in labour laws, differences in remuneration standards and differences in standards of living mean that redeployment overseas will rarely be considered reasonable.

First judgment considering international deployment: Roy v SNC-Lavelin Australia

Roy v SNC-Lavelin Australia Pty Ltd  [2]  was the first judgment to consider the issue. Issued in late 2013, it has inspired a number of subsequent cases dealing with international redeployment.

Mr Roy was employed in Brisbane as Senior Designer for SNC-Lavelin Australia Pty Ltd (SNC). Following a downturn in its global business — particularly in Brisbane, which experienced a five-year low in utilisation — SNC decided to make all Senior Designer positions redundant.

The central issue was whether Mr Roy ought to have been considered for redeployment overseas. Positions advertised internally and externally included a number of roles that were available in North America. The evidence indicated that human resources staff in Brisbane had in fact made inquiries with overseas offices as to whether Australian employees could be re-employed offshore. The response from overseas was that Australian human resources managers should first contact their local offices to see if a redundant employee could be redeployed.[3]

Senior Deputy President Richards observed that these circumstances had given rise to an expectation on Mr Roy’s part that SNC would take reasonable efforts to redeploy him overseas. However, SDP Richards ruled that redeployment overseas was not required.

The following reasons form the basis of the Senior Deputy President’s decision:

  • Global labour market conditions: The evidence disclosed that redundancies were occurring globally. Over 600 employees were made redundant at the Toronto office alone.
  • Absence of policy: Notwithstanding the inquiries made by Brisbane HR as to the availability of overseas positions and the fact that overseas positions were advertised internally to employees, SNC had no policy for effecting international redeployment. Nor had it held out that it had a facility by which to redeploy overseas. Senior Deputy President Richards held that assisting employees in their independently prepared applications for overseas roles did not amount to a policy or representation to that effect.
  • Cost: Relocations overseas ordinarily entail significant expense for the employer.
  • Central management control: In this case, the evidence disclosed that:

- overseas offices were focused on local recruitment;

- each country operated its own human resource functions independently; and

- there was no overriding central management control.

  • Comparability of terms: It would be difficult to assess whether any position overseas could be considered comparable for redeployment purposes. Senior Deputy President Richards observed that “difficult issues would arise where the redeployment (if it could be so defined) were to a position where foreign country terms and conditions of employment apply”.[4] How could one assess similarity of wage, preservation of service entitlements, distance from residence or location, and other factors where there are two positions in different countries?

Having regard to these formidable obstacles, one would have thought that the decision in SNC would signal the death knell of international redeployment, but the issue has persisted.

In subsequent decisions, the issue of whether there is a policy or facility effecting international redeployment and central management control has assumed prime significance.

Second decision to consider the issue of international redeployment: Murray v Ventyx Pty Ltd

Murray v Ventyx Pty Ltd [5] was the second decision to consider the issue of international redeployment.

Mr Murray was employed by Ventyx Pty Ltd (Ventyx) as Technical Project Manager, with responsibility for managing resource allocation to projects, for budgeting and for ensuring completion of work on time.

In mid-2013, Ventyx decided to make approximately 100 positions redundant, including Mr Murray’s, because of a downturn in business performance. Mr Murray lodged an application for unfair dismissal, claiming, among other things, that Ventyx ought to have undertaken reasonable steps to redeploy him overseas, in one of the 20 countries in which Ventyx has offices.

Ventyx argued that it did not usually redeploy employees overseas and only did so if there was a “business reason”. Ventyx also relied upon the costs of international redeployment.

At first instance, Deputy President Gooley ruled that redeployment overseas would have been reasonable having regard to the following:

  • In the course of the consultation process, Mr Murray was provided with a list of vacant position to which he could apply. That list included a number of overseas positions. It would appear that this fact was suggestive of there being a representation to the effect that Ventyx could redeploy overseas.
  • Mr Murray had, at various times during the term of his employment, undertaken work overseas.
  • There was no evidence that Ventyx recruited for positions on a local basis. Rather, the main criterion was whether the staff member was a suitable fit for the job.

However, on appeal, the Full Bench of the Fair Work Commission referred to and applied the decision in Technical and Further Education Commission t/as TAFE NSW v Pykett.[6] The Full Bench ruled that DP Gooley had fallen into error by failing to identify a position to which Mr Murray could have been redeployed: “None of the positions were identified by the Deputy President in her decision.” [7]

Although Pykett was ostensibly concerned with the issue of redeployment within Australia and not overseas, the Full Bench’s reliance upon that decision indicates that there is an underlying unity between international and local redeployment. In both cases — national and international redeployment — it is necessary to identify a position, job or work to which it is reasonable to redeploy the employee.

Moreover, the Full Bench held that there was no evidence indicating that the list of available positions had been presented as a list of positions to which Ventyx was willing to redeploy Mr Murray. As a consequence, it did not amount to a representation that Ventyx could redeploy Mr Murray overseas. This particular finding would suggest that any representation as to overseas redeployment must be express, whether in the form of a formal policy, an email or another communication.

Nevertheless, the Full Bench did not completely close the door on the possibility of international redeployment and, indeed, the issue has arisen subsequently to the Ventyx decision.

Most recent decision to consider overseas redeployment: Booth v True North Australia Pty Ltd

Booth v True North Australia Pty Ltd [8] is the most recent decision to consider redeployment to an overseas entity. In this case, True North New Zealand Ltd was a New Zealand-based entity providing print management services to customers. In 2012, an Australian entity, True North Australia Pty Ltd, was incorporated to service Australian clients in Melbourne and Sydney.

Ms Booth was engaged in Sydney by True North Australia in the role of Brand Logistics Manager, with responsibility for overseeing the product delivery process. This included receiving orders from customers, arranging supply of materials, and ensuring that this process was achieved according to schedule and within budget.

Following a downturn in Australian demand, True North Australia decided to make Ms Booth’s role redundant. Ms Booth was offered the opportunity to apply for a role that was available in Melbourne, alongside another employee whose position had also been made redundant. Ms Booth’s interview was conducted by two personnel of the New Zealand entity, the founding partner and director and a human resources representative.

Ms Booth was unsuccessful for the Melbourne role and subsequently lodged an unfair dismissal claim, alleging, among other things, that True North Australia had failed to undertake reasonable redeployment efforts. One of the issues considered by Commissioner Wilson was whether redeployment to True North New Zealand would have been reasonable.

Commissioner Wilson referred to the factors recognised in Roy v SNC-Lavelin Australia,[9] including whether there is central management control over associated entities.

The fact that Ms Booth’s application for a Melbourne-based role was considered and determined by personnel associated with the New Zealand entity might have suggested that there was, in fact, central management control, at least with respect to hiring staff.

Nevertheless, Commissioner Wilson ruled that there was insufficient evidence to support an argument of redeployment overseas. In particular, there was a failure by Ms Booth to identify an alternative position.[10] This reiterates the point made in Ventyx: employees must identify a position available overseas — this is a threshold requirement, and failure to meet it is fatal to a claim for international redeployment.

Conclusion: theoretical possibility of international redeployment, rather than practical reality

In today’s global world, physical distance and location are becoming less and less important. It is not uncommon for employees in one country to service customers in another. Nevertheless, employees who claim unfair dismissal under the Fair Work Act must recognise the significant and formidable obstacles to claiming that the employer, as part of the genuine redundancy exemption, should have redeployed them overseas.

Although a claim for international redeployment is easily made, at this stage it appears at best a theoretical possibility rather than a practical reality. Large multinational corporations have succeeded in a number of cases in demonstrating the difficulty and unreasonableness of overseas redeployment.

That said, in two of the cases considered above, the applicant failed to identify a job or position available overseas. This is a fundamental error that is unlikely to be repeated for long. If applicants take heed from the mistakes made by their predecessors, other issues — such as central management control, the cost of redeployment and whether there is a policy or representation to the relevant effect — will be considered in greater detail.

On the other hand, employers should ensure that employees are given clarity over the redeployment process to avoid misconceptions on the part of employees as to whether or not there is a policy or facility for international redeployment and the basis upon which employees are selected and hired for jobs overseas. Certainly, communications to employees should be carefully worded and drafted so as to avoid making any representation or statement to the effect that international redeployment is available, if this is not the case.

 

This article was first published in Vol 20, No 5 of the Employment Law Bulletin, June 2014


[1] Roy v SNC-Lavelin Australia Pty Ltd [2013] FWC 7309. Back to article

[2] Above, n 1.Back to article

[3] Above, n 1, at [23]. Back to article

[4] Above, n 1, at [47]. Back to article

[5] Murray v Ventyx Pty Ltd [2014] FWC 516.Back to article

[6] Technical and Further Education Commission t/as TAFE NSW v Pykett [2014] FWCFB 714. Back to article

[7] Above, n 6, at [82]. Back to article

[8] Booth v True North Australia Pty Ltd [2014] FWC 2370. Back to article

[9] Above, n 1.Back to article

[10] Above, n 8, at [55]. Back to article

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.