Can a Redundancy Be Unreasonable Management Action Taken in an Unreasonable Way?

In order to pursue a statutory claim in Queensland for a psychiatric injury a worker must prove:

  • the worker suffered an injury (including an aggravation of a pre-existing psychiatric condition);
  • employment was the “major significant contributing factor” to the injury; and
  • the injury did not arise out of reasonable management action taken in a reasonable way by the employer or the worker’s expectation or perception of reasonable management action being taken against the worker.

In the matter of Scott v Workers’ Compensation Regulator [2021] QIRC 110, the Queensland Industrial Relations Commission (QIRC) was required to consider whether an employer making a worker redundant, or the way in which an employer makes a worker redundant, can be grounds for a statutory claim for compensation under the Workers’ Compensation and Rehabilitation Act 2003.

The appellant in the above matter, Mr Scott, had worked for the employer for 15 years. Mr Scott took a period of leave for unrelated medical reasons in 2017 and 2018. Shortly after returning to work, Mr Scott was called to a meeting with management and was informed his employment had been made redundant effective immediately.

Mr Scott subsequently submitted an Application for Compensation which was rejected by WorkCover Queensland. Mr Scott sought review by the Workers’ Compensation Regulator who reaffirmed WorkCover’s decision to reject the claim. Mr Scott then appealed to the QIRC.

There was no dispute that Mr Scott had suffered a psychiatric injury or that the redundancy was the cause of his injury. The issue that was in dispute before the QIRC was whether Mr Scott’s redundancy was “reasonable management action taken in a reasonable way”.

The QIRC was critical of the manner in which Mr Scott’s redundancy was carried out. The QIRC accepted that the employer encouraged a belief by Mr Scott that his job was safe after returning from leave. The QIRC noted that complaints about Mr Scott’s performance had contributed to the decision to make him redundant, however Mr Scott was never provided with an opportunity to respond to the complaints. The QIRC found Mr Scott was not consulted about the potential redundancy or operational requirements prior to the redundancy being put into effect.

The QIRC noted Mr Scott was “blindsided” by the meeting in which he was made redundant and was not offered the opportunity to have a support person present.

The QIRC found:

“After considering whether management had an obligation to consult with Mr Scott and / or his colleague plant operators, I have determined that they were required to do so. That management did not consult, leads me to find that Mr Scott’s termination was not reasonable management action.

However, even if I were to be wrong on that point, I have found that the way the termination decision was implemented – the conduct of the meeting – was not taken in a reasonable way.”

The QIRC overturned the decisions of WorkCover and the Workers’ Compensation Regulator and accepted Mr Scott’s statutory claim.

This decision is a reminder to employers that the implementation of commercial decisions such as terminations and redundancies needs to be undertaken in a reasonable way. Based on the QIRC’s decision in Scott v Workers’ Compensation Regulator, prior consultation with employees and the proper conduct of termination meetings are important elements to ensure reasonable management action is undertaken in a reasonable way.

“The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.”
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