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Redundancy: avoiding workplace headaches by getting the process right

October 12, 2015


Redundancy is never an easy process for employers to manage. Even if you are keen to do the right thing by your staff, there are plenty of potential pitfalls that you need to be aware of before you embark on the process. After all, no business owner wants to find themselves standing before the Fair Work Commission because they’ve been accused of mishandling the redundancy process.

Making sure you manage redundancy process correctly

When your business is going through the process of making an employee redundant, you should always seek professional advice because there are criteria you need to meet and specific procedures you need to follow to ensure you are complying with the Fair Work Act 2009 (Cth).

You need to consider if you can offer the employee an alternative role

One of the key steps in the redundancy process is considering whether there are any other ‘suitable roles’ that an employee could fill instead of being made redundant. One of the major benefits of finding suitable redeployment is that redundancy entitlements under the Fair Work Act may no longer be payable. Obviously, this will save you money and may ensure your business doesn’t lose an employee with valuable skills.

However, at HR Assured, we often find that our clients have difficulty determining what may be a ‘suitable role’ for the employee because this isn’t as straightforward as it may first appear.

The most common problem is that the only roles available are very different from the employee’s present role.

At this point, the key question you need consider is how different can the role be and still enable you to keep the employee working in your business (as well as avoid the expense of a severance payment).

The Fair Work Commission (FWC) recently looked at this issue and pointed out that there is no hard and fast rule for determining whether a role is suitable or not. Instead, the FWC stated that the process involves considering the proposed role in the context of the employee’s previous role. You also need to evaluate the employee’s general skills and capabilities, as well as their previous employment history. The process you use must be balanced and objective, yet not overly strict.

An example of the kinds of dispute that can arise between employers and employees over the redeployment issue

In a recent case that came before the FWC, an employee argued that two redeployment offers were not suitable because they were not sufficiently consistent with her present role.

The employee claimed that a new role would only be suitable if it aligned not only with her classification level and terms of employment but also her skills, training, experience, seniority, background, career aspirations and actual duties. In other words, the employee believed that she should be entitled to redundancy pay if not offered a sufficiently ‘suitable role’.

Interestingly, the FWC rejected the employee’s claim because the narrow approach she proposed would result in employers having to meet an unrealistic test that would be inconsistent with the purpose of redeployment. Instead, the FWC held that the role would be a suitable alternative if it was consistent with the skills and attributes of an employee and their employment history.

What does this mean for your business?

If you are managing the redundancy process in your business and are investigating whether another role is suitable for the employee in question, you need to take the following steps:

Step One: Look at the employee’s skills, attributes and employment history and compare these with the role available.

Step Two: Taking into account the information about the employee you have gathered in Step One, consider whether the employee sufficiently suits the new role.

At this point, we would suggest you obtain independent advice to ensure that there can’t be allegations that the assessment of what was a ‘suitable role’ was biased.

How should you manage the redundancy process? 

Managing redundancy is a tricky process. While the case we’ve discussed above is encouraging for employers exploring redeployment options for their employees, you must make sure you are fulfilling their requirements. If you are an HR Assured client grappling with these issues, we would urge you to call our Telephone Advisory Service to discuss exactly how to proceed.

Are you currently dealing with the thorny issue of redundancy in your business? HR Assured offers a complete workplace solution where, as part of the package, you can get advice from our experienced workplace relations consultants whenever you need it. Would you like to find out more? Call us on 02 9083 0083.