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Managerial Prerogative Rules OK

10 September 2019
Business meeting behind glass
In this article we look at a recent decision of the Fair Work Commission which recognised the right of employers to exercise managerial prerogative when making redundancy decisions

Industrial Commissions generally place significant weight on management prerogative when reviewing the actions of employers, as evidenced by a recent decision on whether the 'genuine redundancy' exemption applied (Mr Brian Broudou v Eurolinx Pty Ltd [2019] FWC 4469).

Following a downturn in business, including a 15% decrease in sales and a 16% decline in service activity, the employer redistributed the applicant's duties amongst four other employees. As a result, the applicant's position was made redundant.

The applicant alleged that he was unfairly dismissed and that there could be no redundancy as his duties were still required to be performed. Additionally, he contended that there were efficiency issues across the business which should have been addressed prior to the decision to make his job redundant.

The Fair Work Commission dismissed the application and held that the employer had satisfied the genuine redundancy exemption.

Deputy President Boyce said, with respect to the reallocation of the applicant's duties, that the applicant's argument was 'untenable' as the central concern was whether the job, not the duties, still survive.

It was held that despite some efficiency issues existing within the business: 'The law more-or-less permits an employer to structure their business as they see fit…' and 'the Fair Work Commission can take no recourse against what is clearly within the bounds of managerial discretion'.

If you require further information or have any queries in relation to this legal update, please contact Mark Curran.

We would like to acknowledge the contribution of Hannah Plater to this article.

Further Reading