Redundancies - Making them genuine, lawful and respectful

No employer looks forward to a redundancy process – but it is crucial to take the time to step through the process properly, without taking any administrative ‘shortcuts’ to get the process over and done with. Shortcuts and poor communication are often what leads to the risk of claims.

Redundancies are often subject to a high level of scrutiny in FWC, particularly in the context of affected employees bringing unfair dismissal and general protections claims.

What many employers do not realise, is that there is additional scope for affected employees to make an application for compensation for psychiatric injury arising out of the redundancy. In these circumstances the reasonableness of the redundancy comes under scrutiny and, in particular, how the redundancy process was conducted.

This is where the ‘results with respect’ approach is crucial.

The process

According to the Fair Work Act 2009 (Cth) (FW Act), a person is genuinely redundant when the following three criteria are met:

1.   The employer no longer requires that person’s job to be performed by anyone due to the operational requirements of the employer.

This means that the employer must be sure that the dismissal is due to changes in the business’ operational requirements, resulting in that person’s job no longer being required. This can sometimes be difficult, particularly in circumstances where certain aspects of the job are still required to be carried out by someone, but the role as a whole is no longer required.

It can sometimes seem attractive to ‘dress up’ a dismissal for poor performance or misconduct as a redundancy as an ‘easier’ way out. However, FWC are alert to this and will determine if the role ‘really’ was redundant.

2.   The employer has complied with any consultation requirements required by the applicable award or EA.

Consultation is generally the area that employers struggle with the most – by either overcomplicating or oversimplifying the process.

Consultation should:

• be meaningful and genuine – not just a ‘box ticking’ exercise;

• provide as much information and context to the employee as possible; and

• occur before any decisions are made at each step of the way.

Consultation obligations, strictly speaking, only arise where required under the applicable award or enterprise agreement. Technically, if the employee is not award or agreement covered, there is no obligation to consult.

While this may be the case, we recommend still going through consultation process because it promotes a culture of care and respect in the workplace as it allows the employees to feel like their voices are heard and that they are a part of the process. It may also be the case that employees can provide suggestions as to alternatives to redundancy that the employer has not yet considered.

Where 15 or more employees are being considered for redundancy Centrelink (ie Services Australia) must be notified.  Union notification and consultation is also mandatory under the Act when 15 or more employees are being considered for redundancy and at least one of them was a member and sometimes there are express terms in Enterprise Agreements requiring Union involvement regardless of the numbers involved. This is not to say that the union gets to ‘control’ the process or that they get a right of veto but strict compliance is necessary.

3.   There are no reasonable redeployment opportunities within the employer’s enterprise or an associated entity.

Finally, a redundancy will not be genuine if, in all the circumstances, it would have been reasonable to redeploy the employee within the business of the employer or an associated entity.

Factors relevant to whether redeployment is reasonable includes the employee’s suitability for the role such as skills and qualifications and the nature and location of the alternative role. Importantly, employers should not make assumptions that an employee will not be interested in an alternative role which has a lower skillset or salary.

While the redundancy process can seem daunting – it does not need to be. Keeping your employees involved, informed and genuinely listened to is essential for the process to be effected properly.

Our retainer clients can access sample scripts, letters and selection matrix which can assist with the entire process.

Edge Legal

Relationships.  Respect.  Results