Redundancy refers to an employer no longer requiring the service of an employee because the:
- Business no longer requires that position or role to be conducted by any employee; or
- the business becomes insolvent; or
- declares bankruptcy.
There are many reasons why a redundancy may occur, such as:
- The introduction of new machinery and technology that automate process and replace the human requirement;
- the business is relocating interstate or overseas;
- restructuring of the business due to a merger or takeover, deeming the employees position as no longer required;
- the business reduces productivity and production due to low sales and revenue; or
- the business is closing down.
A redundancy should be avoided if possible, as it can be an expensive process depending on the employee circumstance and required pay outs, it can lead to disgruntled employees and negative workplace culture, and can have unpleasant repercussions should the redundancy be determined as not genuine.
When a dismissal is genuine it means that an employees’ role or position will no longer be required by the business, and that within the dismissal the employer referred to consultation requirements (see below) of the employee’s modern award, enterprise agreement or other registered agreement. In the circumstance that an employee’s dismissal is a genuine redundancy an unfair dismissal claim cannot be made to Fair Work.
A dismissal is not determined as a genuine redundancy if the employer:
- Still requires the position or role to be done by someone else or a new hire;
- has not consulted the requirements within the employee’s award, enterprise, employment, or other registered agreement. Such as the provision of required notice; or
- could have given the employee another opportunity or reasonable position within the business or considered other options aside from redundancy.
Awards contain ‘consultation clauses’. These require an employer to notify an employee and legal representatives if they anticipate making changes to an employee’s regular hours of work or roster or are intending to make significant changes to the workplace.
Agreements contain ‘consultation terms’. These require employers to consult with employees about any significant workplace changes, or changes to an employee’s regular hours of work or roster or are intending to make significant changes to the workplace.
In both instances, the consultation requirements prompt employee access to a representative within any consultation meeting, in which they are being informed of such changes.
A third-party consultation with a specialist, such as Assurance HR, is highly recommended prior to discussing or actioning redundancy with employees to ensure that appropriate process is initiated, inclusive of a consistent and formal approach to guarantee all employer obligations are satisfied. Call us today on 1800 577 515 to speak with one of our team about your business specific needs.