Redundancy is a genuine risk
February 5, 2016
Making an employee, or a group of employees, redundant is never an easy process. There are financial and emotional consequences for those directly affected, as well as inevitable disruption and reduced productivity which impacts the whole business.
Redundancy is often viewed as a necessary evil. A strategy that is sometimes required to ensure the long term viability of the business. But it can quickly become a time consuming and expensive nightmare for those who get it wrong.
What is a genuine redundancy?
Under the Fair Work Act 2009, a person who has been made redundant is unable to claim unfair dismissal, so long as the redundancy was ‘genuine’. The following three conditions must be met for it to be a genuine redundancy:
- you do not require the person’s job to be done by anyone
- you have followed any consultation provisions in the applicable Modern Award or Enterprise Agreement
- the person cannot be given another job within the business or an associated entity.
Do I have to offer another role?
Yes, you do. The redundancy will not be genuine if the person could have been given another job within your business or an associate entity. Failing to consider options of re-deployment can expose you to the risk of unfair dismissal. You are not required to pay redundancy if the worker accepts an alternative role. In that case the employment remains ongoing as the employee is simply performing a new role.
What if they refuse another role?
In the event that the employee refuses redeployment, the payment of redundancy will depend on the similarity between the redeployment role and the role from which the employee is being made redundant.
In some cases, where an employee refuses redeployment the Fair Work Commission, on application by the employer, may order a reduced redundancy pay, taking into consideration the offer of other suitable duties.
Do I have to pay redundancy?
Generally, yes you will be required to pay redundancy. But there are exceptions. These include:
- the employee’s period of continuous service with the employer is less than 12 months
- the employee is engaged as a casual
- the employer is a small business employer.
For more information on the recommendations and what this means for you, clients should contact the HR Assured team. If you’d like more information about the benefits of becoming an HR Assured client contact us today for an informal chat.