The Case

Stickley v Kestrel Coal Pty Ltd (2015)

Mr Stickley was employed by Kestrel Coal Pty Ltd (Kestrel Coal), a subsidiary company of Rio Tinto Coal Australia Pty Ltd (Rio Tinto Coal). Rio had four other subsidiary companies that operated coal mines in Australia. Rio Tinto Coal was also a member of the Rio Tinto Ltd group (Rio Tinto Ltd).

Mr Stickley’s employment with Kestrel Coal was terminated on the grounds of redundancy. Mr Stickley made an application to the Fair Work Commission (FWC), alleging he had been unfairly dismissed. Kestrel defended the application, claiming the redundancy was genuine.

The Fair Work Act 2009 (Cth) provides that a redundancy is not genuine if it would have been reasonable in all the circumstances for the employee to be redeployed within the enterprise or that of an associated entity.

Mr Stickley argued that it was reasonable for Kestrel Coal to redeploy him in an associated entity of Rio Tinto Ltd.

The Verdict

The FWC found that at the time Mr Stickley was dismissed, there were no other positions in Rio Tinto Coal to which he could have been redeployed.

In considering whether Mr Stickley could have been redeployed into Rio Tinto Ltd, the FWC indicated it needed to examine if this would have been reasonable in all the circumstances. One factor it needed to consider was the level of managerial integration between the entities.

While the FWC found there were shared recruitment services between Rio Tinto Coal and Rio Tinto Ltd, and some managerial integration, each entity operated as an autonomous, distinct business unit with respect to recruitment decision-making. The FWC therefore held that Kestrel had no capacity to redeploy Mr Stickley to another Rio Tinto Ltd company. As such, the FWC held that Mr Stickley’s termination was a genuine redundancy and dismissed his application for unfair dismissal.

The Lesson

Whether redeployment to an associated entity will be reasonable requires consideration of a number of factors at the time of dismissal, including:

• the level of managerial interaction between the entities, especially in terms of decision-making in relation to recruitment;
• the nature of any available positions;
• the qualifications required to perform the job;
• the employee’s skills, qualifications and experience (ask yourself, “Can they perform the role? Is it reasonable to provide them with training?”);
• where the redeployed job is located compared to the employer’s current work location and personal residence; and
• whether the remuneration is comparable.

Please note: Case law is reported as correct and current at time of publishing. Be aware that cases in lower courts may be appealed and decisions subsequently overturned.