Redundancies and the skills matrix

When implementing redundancies, it is critical that the process for selecting employees for redundancy is a transparent and objective one. A skills matrix can assist employers in this regard by creating clear and objective criteria against which employees are to be assessed .

A recent decision of the Federal Circuit and Family Court of Australia (the Court) has cautioned employers that a skills matrix must also be completed objectively and employees should not receive lower scores for prohibited reasons.

In the decision of Australian Manufacturing Workers Union v United Lift Services Pty Ltd [2023] FedCFamC2G 275, the Court was required to consider claims by two former employees of United Lift Services Pty Ltd (the Employer), that they had been scored unfavourably in a skills matrix (and were therefore made redundant) because:

• they were members and workplace delegates of their respective unions;
• they had exercised workplace rights to make complaints about their employment; and
• they had engaged in industrial activities and acted in the role of workplace delegates.

The Employees (Mr Burton and Mr Nesbitt) had both commenced employment in early 2020 and worked in the Employer’s construction division (one as an electrician and the other a fitter). In June 2021, they were elected delegates for their respective unions.

It had been accepted by the Court that, throughout the course of their employment, both Employees had also made a number of workplace complaints, including:

• Mr Burton had made inquiries as to the progress of enterprise bargaining and raised issues as to his perceptions of the conduct of his manager;
• Mr Nesbitt had made complaints about an unlicensed employee certifying and checking his electrical work, the Employer’s management of COVID at two work sites, unsafe practices with materials fixed to the roof of a lift, as well as an apprentice being sent to do calls on his own and not supervised; and
• both Employees had made complaints after electing to work a 36-hour week (with RDOs) as permitted under their enterprise agreement, but their pay slips continued to record them as working a 38-hour week, in circumstances where the Employer had shown considerable opposition to employees working 36-hour weeks.

It had also been accepted by the Court that there had been a few occasions in which the Employer had advised Mr Burton that he should stop asking about the progress of the enterprise agreement or “you might end up on less money”.

On 19 July 2021, the Employer advised employees in the construction division that they were being stood down with immediate effect following the NSW Government’s announcement that all construction work was to cease due to the COVID-19 pandemic.

The next day, employees in the construction division were advised that the Employer was intending to downsize its workforce and that two roles would be made redundant. The Employer sought Expressions of Interest for voluntary redundancy by no later than close of business on 28 July 2021.

However, at about 1:00pm on 28 July 2021, the Employees were advised that their roles had been made redundant due to “workloads”.

The Employer argued that the redundancies had arisen following discussions between senior management between 22-23 July 2021, in which it was decided that some technicians would be made redundant due to the “uncertainty, shutdown of building, sites and reduction of sales from May 2021”. It was submitted that they used a skills matrix based on the criteria of safety, peers, staff, customer relations, technical skills and quality of works.

In considering the reasons for the redundancies, the Court formed the view that:

• the timing of the redundancies was very “curious”. The Employer had not produced any evidence of a work shortage or financial difficulties at the time of the decision, and it did not make sense given Mr Nesbitt was performing considerable overtime prior to the stand down. If it were true, the Public Health Order would have allowed the Employer to stand employees down without the need to pay them during the period of the closure. Accordingly, to the extent that the Employer relied on cash flow issues as a reason for the redundancies, the Court did not accept this submission;
• the Employer’s submission that it dismissed the Employees prior to the deadline for voluntary redundancies because it considered volunteers for redundancy to be unlikely, was implausible. The Court noted the deadline was close of business the same day, and the need to move quickly was inexplicable given that, on the morning of 28 July 2021, it had been announced that the construction industry was re-opening; and
• it did not find the evidence of the decision-maker to be credible – he could not answer straightforward questions and some of his notes (which raised the possibility of redundancy between May-June 2021) were more likely to be “later re-creations in order to justify actions that were taken” rather than contemporaneous records.

The Court was also not convinced that the skills matrix properly represented the skills and attributes of the Employees.

In relation to Mr Burton, the Court accepted that there were some issues in relation to his work performance (as he had received two warnings for inappropriate language and behaviour), which may have played a role in the decision to make him redundant.

However, in relation to Mr Nesbitt, there was no evidence to suggest any issues with his performance. The Court was satisfied he was an otherwise good worker and that he had been marked down with the intention of ranking him below other workers to justify him being selected for redundancy.

The Court was also not convinced by the skills matrix in circumstances where it included an employee who had purportedly been dismissed some eight days before the Employer claimed to have created the matrix.

Ultimately, the Court was not satisfied that the complaints and industrial activity of the Employees did not form a substantive and operative reason for this dismissal. The Employer was found to have engaged in unlawful adverse action against the Employees and the matter was stood over for determination on penalties and compensation.

Lessons for employers

A skills matrix is intended to provide a clear and objective basis for selecting employees for redundancy. However, the mere existence of a skills matrix will not always be a sufficient defence to claims of adverse action. As this case shows, the scoring in a matrix must also be based on objective evidence.

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