Redundancy – What You Need to Know

In the July HR Breakfast Club Forum, BAL’s Senior Associate within the Employment Law & Investigations team, Rebecca Richardson , presented on redundancy.

Some of the topics Rebecca covered included:

• What is the definition of genuine redundancy?
• Are employers required to consult with the employee being made redundant?
• What are the benefits of redundancy to the employee or employer?
  

What is a genuine redundancy?

Genuine redundancy is outlined in section 389 of the Fair Work Act 2009 which provides that…

• A person’s dismissal was a case of genuine redundancy if:
  • the person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and
  • the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.
• A person’s dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within:
  • the employer’s enterprise; or
  • the enterprise of an associated entity of the employer.

Operational Requirements

Some examples of changes to the ‘operational requirements’ of a business that would allow for redundancy include:

• The completion of a project.
• Outsourcing.
• A machine now being available to perform the same role.
• A business experiencing a downturn;
• A business restructuring to improve efficiency;
• A site or business closure.

A redundancy is only genuine to that extent that a job is, in one way or another, no longer necessary to be performed due to the re-organisation or restructure of the operations of a business. However, establishing whether an ‘operational change’ has taken place may change on a case-by-case basis.

Consultation with Employee

When the act talks about complying with ‘any obligation in a modern award or enterprise agreement it is predominantly referring to the requirement that employers consult with employees when there is a ‘major change’ that affects their employment. The requirement to consult only applies if the employment is covered by a modern award or enterprise agreement. If you are required to consult, and you fail to do so, this will result in the redundancy not being ‘genuine’.

If you are unsure whether you are required to consult, er on the side of caution. There is no harm in consulting with employees.

Redeployment

You must consider whether there are any possible roles into which the person can be redeployed. If there is an eligible role and redeployment is not offered, the redundancy will not be genuine.

Benefits of Genuine Redundancy

Benefit to employers: Employees whose employment has been terminated as a result of a genuine redundancy are unable to access the unfair dismissal jurisdiction.  Although genuine redundancy protects an employer from an unfair dismissal claim, employees may still have other causes of action, including a general protections claim; a discrimination claim; breach of contract; or a breach of enterprise agreement.

Benefit to employees: Redundancy pay and favourable taxation (although we note that not everyone is entitled to redundancy pay – it depends on the length of service and whether the employer is a small business).

To register for future HR Breakfast Club forums, visit our monthly forum page and register to attend.If you have any questions or wish to discuss your circumstances with a lawyer, please contact the BAL Lawyers Employment Law & Investigations team on 02 6274 0999.