Can a lack of skills be used when selecting an employee for redundancy?

Yes. Provided the skills are objectively necessary for the operational requirements of the business.

In Qian Tang v Hisense Australia Pty Ltd [2024] FWC 2259 (27 August 2024) the FWC found that the employer had not unlawfully ‘targeted’ and appropriately used a five criteria skills matrix to determine which one of the three similar/same positions within the department would be made genuinely redundant. The employer assessed that an employee, who had recently returned from parental leave, scored the lowest in terms of recruitment experience, communication skills and English proficiency. Accordingly, based on the employee’s overall lowest score against the selection criteria it was her position which was made redundant.

Our Take

Redundancies are rarely about ‘the What’ (ie how many people will be made redundant) and are more about ‘the How’ (ie the process taken). Appropriate consultation and notification generally determine whether the FWC or a court will find the redundancy genuine or not, and in our experience are more likely to reduce claims from employees who feel ‘blindsided or targeted’.

Using the selection criteria based on objective criteria derived from ‘public documents’ such as position descriptions, strategic plans and performance criteria etc provide stronger legal protection than subjective criteria such as ‘good team player’, ‘trainability’ and ‘corporate fit’ etc. Employers can further bolster their legal position by having multiple points of assessment and where practicable using independent assessors.

Action Items

• Use redundancies genuinely – they are not intended to be a substitute for performance management or disciplinary processes.

• Consult boldly and unapologetically – a redundancy process is usually about corporate ‘survival’. There are normally some operational and environmental factors that need addressing. Don’t downplay these factors or taint them with personal or ancillary factors. Tell your people how you are going to use a redundancy process to make the organisation better and trust that they can cope with such a process.

• Remember there are ‘survivors’ – no one wants to work for organisations who don’t demonstrate ongoing integrity and manage the psychosocial risks of such processes. Your unhappy survivors may be your next unintended ‘leavers’ or worse ‘embittered stayers’!

Edge Legal

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