When is redundancy not really genuine?
A redundancy is genuine if:
- the employer no longer requires the person’s job to be performed by anyone because of changes in operational requirements;
- the employer has complied with any consultation obligations in an applicable modern award or enterprise agreement; and
- it would not have been reasonable in all the circumstances to redeploy the employee within the employer’s enterprise, or the enterprise of an associated entity.
1. Changes in operational requirements
Possible examples of changes in the operational requirements of an enterprise include:
• a machine is now available to do the job performed by the employee
• the employer’s business is experiencing a downturn, for example, the employer only needs three people to do a particular task or duty instead of five
• the employer is restructuring their business to improve efficiency and the tasks done by a particular employee are distributed between several other employees and therefore the person’s job no longer exists.
The obligation to consult arises when considering a major workplace change that will have a significant effect on employees, such as redundancy, who are covered by an award or an enterprise agreement. All modern awards and enterprise agreements must include consultation terms that require employers to consult employees. Consultation usually requires an employer to notify its employees of a decision to introduce any major workplace change as soon as practicable after the decision is made and to discuss the change, the effect of the change and what is being done to minimise any adverse effect. There is also an obligation to provide information to employees about the proposed change in writing and to consider matters raise by the employee.
It is not a case of genuine redundancy if the person dismissed could have been redeployed in another position within the business or “associated entity” and it would have been reasonable in all the circumstances to redeploy them (if only modest retraining is required for redeployment then redeployment may be required to be offered).
If the employee’s dismissal was not a genuine redundancy and it could be considered harsh, unjust or unreasonable, the employee could make an unfair dismissal claim.
For employers who fail to observe the Fair Work Act 2009 (Cth) (the Act) requirements relating to redundancies they could find themselves exposed to unfair dismissal claims in circumstances in which they may have had good business reasons for termination.