By Gaby Grammeno Contributor

The Fair Work Commission has found an employer’s failure to consult meant a dismissal did not qualify as a genuine redundancy, after the company sacked its co-founder and former CEO. 

With his brother, the former CEO had co-founded a business in 2009 designing, manufacturing and installing solar power poles and served as a CEO of the business until December 2023. 

In 2021 he’d secured financial investment from another company to expand the business, but the conditions of the investment ultimately resulted in him and his brother losing control of the company.  

In December 2023 a new CEO was appointed. The brothers stepped down from their respective CEO positions in Australia and the United States, and assumed roles involving research and development. 

On 29 October 2024, the former CEO was informed during a meeting that the company was letting him go. He was later given a termination letter stating that ‘as a result of significant restructuring required in order to remain viable into the future’, his position had been made redundant. 

The letter stated that the company no longer required his role to be performed by anyone, that they regretted the necessity of the decision and that it was ‘in no way a reflection on you or your performance within the business’. 

It went on to say that they had been unable to find a suitable alternative position for him and his employment was terminated with five weeks’ notice, as per his employment agreement. 

The former CEO applied to the Fair Work Commission for a remedy, alleging he’d been unfairly dismissed, but the employer objected to his application on the grounds that his dismissal was a case of a genuine redundancy. 

 

In the Commission 

The Commission’s first task was to decide if it really was a genuine redundancy, in the light of s 396 of the Fair Work Act 2009.  

For a dismissal to count as a genuine redundancy, the employer must no longer require the employee’s job to be done by anyone because of changes in the operational requirements of the employer’s enterprise, and must comply with the consultation provisions of a relevant modern award or enterprise agreement. Further, it will not be a genuine redundancy if it would have been reasonable in all the circumstances for the employee to be redeployed. 

The former CEO claimed that his dismissal was not a genuine redundancy, but rather a targeted effort to remove him and his brother. He said that despite his status as a director, he’d been excluded from business operations since the appointment of the new CEO – not invited to discussions, general meetings or Board meetings in 2024. 

He said he was not aware of any cost-cutting measures or redundancy considerations and had not been involved in any discussions regarding investment decisions, operational matters or staffing, including potential redundancies. 

He claimed the research and development work was ongoing, that the employer had not provided operational reasons for the restructure, had not explored alternative roles for him and had not undertaken any consultation as required by the Award covering his work, and the Small Business Dismissal Code. 

He said that the culture of the business under the new leadership was ‘oppressive, unstable and toxic’, making reinstatement untenable, so he sought compensation. 

The new CEO of the company, who’d been directly involved in the decision to dismiss the former CEO, said that the company’s financial performance had failed to improve despite multiple rounds of investment and cost-cutting measures, and as a result the workforce had to be cut from 16 to 11. The former CEO’s redundancy was driven solely by financial necessity, he said, as the business lacked sufficient funds to continue with product development. 

He disputed the former CEO’s assertions that he had not been involved in discussions regarding the financial pressures, the move away from R&D and earlier redundancy, and that redeployment options had not been explored.  

Moreover, he submitted that the former CEO was not covered by any modern award due to the seniority and nature of his role. 

He also expressed the view that the former CEO’s performance in management, finance and operations did not support his claim that he could perform any role in the business, and that in fact there were no existing roles matching the former director’s skill set or salary expectations.  

The employer also raised allegations of misconduct discovered after the former CEO’s dismissal, including some sexually explicit photographs on his company-issued laptop and indications that he may have taken unauthorised leave – allegations which the former CEO rejected. 

Deputy President Lyndall Dean was satisfied that the employer no longer required the former CEO’s position to be performed due to its financial circumstances. There was no real dispute that the business was experiencing financial difficulties, and no suggestion that the former CEO’s role was subsequently filled by another person.  

She also considered that the former CEO was covered by the Manufacturing and Associated Industries and Occupations Award 2020 as his duties fell within it and the employer had not provided evidence to disprove this, so that the Award’s consultation obligations applied. 

There was no evidence that the employer had given the former CEO written notification of the major change, or an opportunity to be heard on measures to mitigate the impact of the redundancy. The employer’s assertion that the former CEO was aware of cost pressures and prior redundancy process did not satisfy the Award’s consultation obligations. 

Deputy President Dean found that since the consultation requirements had not been met, the redundancy had not been a genuine one for the purposes of s 389 of the Act the Act. 

The Deputy President then turned to the merits of the former CEO’s application and considered whether the dismissal was harsh, unjust or unreasonable. 

She found that while the redundancy was due to changes to the operational requirements of the business, it was clear that the former CEO was not given an opportunity to respond and accordingly was not afforded the procedural fairness required by the Act. 

Deputy President Dean was therefore satisfied that the former CEO had proved his dismissal was harsh, and the lack of consultation meant he had not had the opportunity to engage in meaningful dialogue and suggest alternatives to his redundancy or other options for cost cutting. 

As a result, his dismissal was unfair. The Deputy President ordered compensation equal to seven weeks’ salary, in effect covering the period between the end of the notice period and the commencement of his alternative employment. 

 

What it means for employers 

To count as a genuine redundancy, a dismissal must follow proper procedures and meet the criteria set out in ss 389 and 396 of the Fair Work Act 2009. Employers would be well advised to check with Business NSW’s Work Advice Line on 13 29 59. 

 

Read the decision 

Nathan Leslie Giblett v Powerstack Australia Pty Limited [2025] FWC 2208