Toyota’s controversial strategy for making underperformers redundant likely to withstand legal challenges: Experts

Legal experts say Toyota’s controversial use of selection criteria to make underperforming staff redundant is likely to withstand legal challenges, despite the unions labelling the process used to sack 350 workers a “sham”.

Toyota informed 350 staff yesterday that they were being made redundant on the basis of a selection criteria which used ratings on a scale of one to five.

In highly tense scenes, workers that had been picked for redundancies were bussed from Toyota’s Melbourne plant to a nearby wedding reception venue, where they were informed of their fate.

Beck Angel, media and external affairs manager at Toyota, says it was “a very difficult week for Toyota Australia”.

“All employees at the manufacturing plant were assessed using the same selection criteria agreed on by the union,” Angel says.

“The selection criteria assessed employees on a range of factors such as behaviour, skills and knowledge.”

Angel said the same selection criteria was applied to all 3,350 manufacturing employees and “no individuals were targeted during this process”.

However, the Australian Manufacturing Workers Union (AMWU) claims Toyota had enough demand for voluntary redundancy packages and had instead targeted shop stewards and health and safety representatives in the redundancy process.

Dave Smith, assistant federal secretary at the AMWU, told SmartCompany representation of shop stewards and occupational health and safety at the Toyota plant has been “completely wiped out” in some areas by the redundancies.

“The assessment criteria was agreed to as part of the negotiations with the company but I guess our concern now is how subjective it has been and whether in fact it is just a sham process designed to create the illusion of transparency and allow them to target whoever they want,” says Smith.

“Some of the [union] delegates chose to leave on a voluntary basis but there have been a large number that have been made redundant.”

The union says a voluntary redundancy program was offered at its request, however the program only received 168 responses and allowed 80 voluntary redundancies.

Smith says many union members did not apply for voluntary redundancy as the terms of the redundancy had not been agreed when applications were called for.

“We are obviously really disappointed for our members who have been made redundant and it has been very traumatic for the members left behind at the plant,” says Smith.

The appeals process agreed in Toyota’s negotiations with the union involves an initial appeal back to Toyota and if the redundant person is still unhappy an appeal can be processed through the Fair Work Act.

In any event, Smith says “the union will be seeking legal advice in relation to some of these determinations”.

Chris Hartigan, partner at the law firm Herbert Geer, told SmartCompany Toyota appears to have “gone through a defensible, lawful [redundancy] process” despite the union’s allegations .

Hartigan says to avoid unfair dismissal claims a redundancy has to be a genuine redundancy and the company must establish it does not want the job performed by anyone.

He says Toyota would be able to do this by pointing to its downturn in sales.

Redundancies also have to comply with consultation obligations in any enterprise agreement according to Hartigan.

He says voluntary redundancies can be called for but an employer usually retains the right to accept or reject them on the basis of the skills that it needs.

“If they have done all those things there would be a strong argument that individuals made redundant could not run an unfair dismissal case but it may be possible to dispute individual cases,” says Hartigan.

Andrew Stewart, professor of law at the University of Adelaide, says the only other way the redundancy program could be challenged is if it operates in a discriminatory manner.

Stewart says if the criteria used to rate workers has the effect of disproportionately affecting older workers, female workers, union members or union officials it is possible there may be a challenge under various discrimination laws.

“The union will have to prove that is not just an action of the numbers, it is something built into the system and that may be difficult to prove,” says Stewart.

“Realistically, Toyota is a big company, it has access to very sophisticated legal advice, it seems unlikely to me it will have done something that is obviously unlawful.”

“If there is an issue for Toyota it is more likely to be the look of the process rather than the legality.”