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HT for Small Biz - Newsletter

What is a genuine redundancy?

The criteria for what establishes a genuine redundancy can be complex, however, learning how to carry out a lawful redundancy process will not only protect against potential legal claims – and there are several possibilities including unfair dismissal, adverse action, breach of an award or unlawful discrimination – but will also allow things to run more smoothly for all involved.
The first step is to determine if the redundancy is genuine or not. Calling a dismissal a redundancy when it really was for a lack of performance will inevitably cause trouble.

Establishing a genuine redundancy

A redundancy can happen when an employer;

  • No longer needs an employee to perform his or her role
  • Becomes insolvent or bankrupt

Redundancy can happen when a business;

  • Introduces new technology (eg. The job can be performed by a machine)
  • Slows down due to lower sales or production
  • Relocates interstate or overseas
  • Restructures or reorganizes because a merger or takeover happens

A dismissal is not a genuine redundancy if the employer;

  • Still needs the job to be completed by someone else (eg. Hires someone else to do the job)
  • Could have reasonably, under the circumstances, given the employer another job within the employer’s business or an associated entity
  • Has not followed relevant requirements to consult with the employees about the redundancy under an award or registered agreement.

Consultation obligations

Procedural fairness yields great significance when determining if a redundancy is genuine or otherwise. The technical obligation to consult with affected employees is, strictly speaking, limited to situations where consultation about workplace change is required by an applicable modern award or registered agreement. If no award or registered agreement applies to the affected employees, then there is no strict requirement to consult, however organisation's may wish to conduct such a process regardless of the parameters imposed by relevant legislation as a matter of procedural fairness.

A consultation process should be conducted with a meaningful intention to reach the best decision for all rather than a simple “tick the box” to say that it has taken place.

Simply, the redundancy consultation process should involve providing the following information in writing to those affected by the changes;

  • Explaining the issues that have made the relevant changes necessary
  • Setting out whether all feasible alternatives have been considered
  • Provide a rough framework for the proposed changes
  • Asking for input and listening carefully to the responses and alternative ideas of the employee (eg. Redeployment, transfer to lower paid duties, part time employment, contractor arrangement etc.)
  • Making any necessary decisions after taking on board the input provided by the affected employee

If you require clarification or need assistance with implementing a genuine redundancy, please feel free to call us on (02) 8882 9694

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