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Small business not exempted from consultation obligation on redundancy

by | Jul 21, 2026 | Employment Protections

In a recent decision the full bench of the Fair Work Commission affirmed that small businesses are expected to comply with modern award consultation obligations on redundancy, in refusing an employer’s appeal from an order to pay compensation for unfairly dismissing a long-term employee by a process that was not a genuine redundancy.

The Facts

The employee had been employed as a sales representative for nearly 15 years.  The Storage Service and Wholesale Award 2020 applied to his employment.

The employer was a small business having 9 employees, including 3 sales representatives, and sold imported tiles.

On 28 February 2025, the employee was called to a meeting and informed that the company had decided that morning that, due to slow sales, the business could not afford to employ three sales representatives, and he was dismissed.

After a discussion about his final pay, he was required to clear his belongings and return the keys to the company car.  The employer arranged an Uber to drive him home.   The employee was paid 5 weeks wages in lieu of notice and payment of his accrued annual leave and long service leave entitlements.

The employee applied for unfair dismissal.

The First Hearing

At the hearing the Deputy President observed that the Small Business Fair Dismissal Code did not apply to redundancy situations and was not relevant to the question of whether the dismissal was fair.

The Deputy President then found that the dismissal was unfair in circumstances where:

  1. The employer went to the meeting with the intention of dismissing the employee.
  2. The speed by which the employee was dismissed indicated a lack of consideration for the employee’s circumstances and the consequences of dismissal.
  3. The employer failed to engage in a consultation process required by the applicable modern award.

The Deputy President also found that the employee may still have been made redundant at the end of a proper consultation process, though that was not certain, and there were other means available to the company to cut costs.

The Deputy President estimated that a proper consultation process would have taken 4 weeks given the need to consult with other salespersons and consider all options.

The Deputy President awarded compensation:

  • For the four-week period during which a consultation process could have occurred, and
  • A further 12 weeks wages – which was the minimum redundancy payment the employee would have received if the employer had not been a small business – as an appropriate amount to recognise his long and loyal service and the impact of the loss of his employment.

The employer appealed the decision by the Deputy President.

The Appeal

The Full Bench dismissed the employer’s appeal, finding that:

  • The Small Business Fair Dismissal Code is not relevant to considering if a dismissal was a genuine redundancy.
  • Small businesses are not exempt from consultation obligations in modern awards.
  • The benefits of consultation are likely to be more critical for employees of small businesses, as small businesses are not required to pay redundancy payments set out in the Fair Work Act scale.
  • Consultation should be meaningful and engaged in before an irreversible decision to dismiss an employee has been made.
  • The reality was that the employer’s ‘consultation session’ was a meeting where the employee was perfunctorily informed that his position was redundant and he was to be dismissed.
  • The speed at which the dismissal of the employee was carried out goes to the fairness of the dismissal.
  • There was no error in how the Deputy President determined compensation.

Implications

In a redundancy process small business employers are expected to comply with the consultation obligations of modern awards applying to an affected employee.

Employers should also be aware that the speed at which the dismissal of the employee is carried out goes to the fairness of the dismissal.

At WorkLegal our experienced team can answer your questions and put you on the right track.  A range of fixed-price Initial Consultations will suit most people’s needs in quickly learning what their options are.