How to compliantly proceed with a redundancy

By Amanda Curatore

Welcome to part one in our series of articles on how to compliantly proceed with a redundancy, where we touch on the tricky subject of workforce restructuring.

In light of the devasting economic impact the coronavirus has caused, many businesses are now faced with the increasingly common scenario of considering employee redundancies to remain viable in the future.

In this article, we will explain what redundancy is and the steps to process a termination compliantly and mitigate your risk of an unfair dismissal claim.

What is redundancy?

Redundancy occurs when an employer doesn’t need an employee’s job to be performed by anyone because of factors including:

the introduction of new technology (the employee’s job can now be done by a machine);
the business slowing down or losing profit;
the business closing down altogether or relocating overseas; or
by the business restructuring its operations.

Under the Fair Work Act 2009 (‘Act’) an employee is not entitled to bring an unfair dismissal if the dismissal is a genuine redundancy.

The Act provides the dismissal was genuine redundancy if:

You no longer required the job to be performed by anyone because of changes in the operational requirements of the business
You have complied with any consultation obligation arising from a modern award or enterprise agreement; and
It would not have been reasonable in all the circumstances for the person to be redeployed.

There are three requirements an employer must adhere to when initiating the termination of an employee’s employment due to a genuine redundancy. As per above, these include that there is an operational change affecting the business, the employer has met their consultation obligations and redeployment was offered, where applicable.

What about casual employees?

Although casual employees are not entitled to redundancy pay, they are still very much entitled to the benefit of the redundancy process requirements if you intend to terminate their employment for reasons of genuine redundancy.

In the coming article, we will explain the first step in the redundancy process: operational requirements.

HR Assured is an end-to-end outsourced HR solution for SMEs combining unlimited expert workplace relations advice, award-winning HRA Cloud Software, auditing and our Advice Promise. Our clients reduce the time they spend on HR by up to 90%! That’s more time for them to run their business and get on with the things that matter.

Disclaimer: Businesses operating as an unincorporated entity in Western Australia should seek specific advice regarding redundancy obligations.

Amanda Curatore is a qualified senior workplace relations consultant at FCB Group and HR Assured. Amanda is highly experienced in providing workplace relations advice and assistance to clients in a wide range of matters including employment contracts, modern award interpretation, managing performance, bullying and harassment, terminations and managing risk.

How to compliantly proceed with a redundancy – part 1: overview

What is redundancy?

What about casual employees?

Other articles in the series:

Backpay obligations for enterprise agreements: the FWC has decided

Fixed and maximum-term contracts are changing. Here’s what you need to know

Small business, big mistake: FWC rules on procedurally unfair terminations

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