Compliantly proceed with a redundancy – part 3: consultation obligations

By Amanda Curatore

Welcome to part three in our series of articles on how to compliantly proceed with a redundancy. In this article, we will delve into the obligations of an employer to consult with an employee during the redundancy process. Let’s get started…

Businesses seeking to undertake redundancy processes for staff due to economic downturn and lack of work associated with the COVID-19 pandemic must continue to meet their consultation obligations under any relevant modern award or enterprise agreement applying to their employees.

Whilst many businesses are experiencing unprecedented circumstances, the Fair Work Commission has set a clear reminder that businesses must comply with consultation obligations before making decisions regarding redundancies.

Auscript, the Federal Court’s transcription service, has been criticised for making “hollow” consultation promises to genuinely consider alternatives to redundancy, when it had, in fact, concealed its decision to make 58 roles redundant. Auscript had failed to undertake the correct consultation process in line with its Enterprise Agreement and made decisions regarding redundancies before any real opportunity for the Australian Services Union (ASU), its members or employees to provide any feedback or provide any information which would influence Auscript’s decision.

Whilst Auscript had experienced a loss of up to 60% of its work as a result of the COVID-19 pandemic, which establishes there had been changes to its operational requirements resulting in a need to proceed with redundancies, it failed to meet its legal obligation to engage in genuine consultation and did not consider other options to mitigate negative outcomes, such as the utilisation of leave hours, leave without pay, career breaks or other support programs.

As a result of Auscript’s failure to consult its employees or the ASU as required by its Enterprise Agreement, the Fair Work Commission has ordered the company to refrain from compulsory redundancies until it had met with employees more than once to explore options.

What should businesses be doing?

All awards and registered agreements have a consultation process for when there are major changes to the workplace, such as redundancies.

Where the business has demonstrated a change in their operational requirements and has decided to proceed with a redundancy process, it is now up to the stage where it is required to meet and consult with its employees.

If no modern award applies to the employee (and keep in mind the expanded scope of the Miscellaneous Award 2010), that is, the employee is award-free, then no consultation requirement is necessary. However, it is always advisable to consult with the affected employee(s) nonetheless as this can assist them in understanding the genuine basis for the redundancy and therefore mean they are less likely to contest the decision.

Where your employee is covered under a modern award or enterprise agreement, the consultation process generally requires:

giving notice of the changes to employees and their representatives; and
discussing with the employees and their representatives the introduction of the changes, and their likely impact on the employees and measures to avoid or reduce the adverse effects of the changes on employees; and
considering any feedback or matters raised by the employees about the changes.

For the consultation discussion, an employer must give all relevant information about the change to the employee and their representative (if applicable) including:

their nature;
their expected effect on the employee; and
any other matters likely to affect the employee.

It is best practice to invite your employee to a consultation meeting by providing at least 24 hours’ notice and offering them the opportunity to bring a support person if they wish. In today’s world where social distancing is the new normal and working from home has become a given, it is hard for employers to organise a face-to-face consultation meeting. And this is ok. Consultation can occur over the phone or via a videoconference meeting. The crucial factor is not where or how the meeting is held but rather whether the meeting allowed the employee an opportunity to influence the redundancy decision.

In addition, it will not be an uncommon situation where a business is looking to restructure or close an entire part of its enterprise which will mean that hundreds of redundancies will be on the horizon. Whilst it is ideal to individually meet with each employee separately for the purposes of the consultation discussion, for an employer to individually meet with every impacted, where the number of employees facing redundancy is high, can be a very heavy burden.

Instead, what will also be acceptable in these circumstances is for the employer to hold a meeting with all affected individuals advising of the change(s) to the business’s operational requirements and what this means for their department and ultimately their position. Employers should then invite the employee to engage in the consultation process on the papers, that is, provide employees with an opportunity to submit any written feedback they may have by a set date and then once this date lapses, a decision can be made, regardless of whether the employee submitted any feedback or not.

The consultation discussion is much more than just box-ticking exercise. It requires an employee to have a real opportunity to influence the decision-maker. That is, an employer must never attend a consultation meeting advising the employee they have decided to proceed with termination for redundancy of their position. Rather the purpose of the consultation discussion is to allow the employee the opportunity to provide feedback for you to consider before finalising your decision regarding redundancy.

Once employees have been provided with the opportunity to provide any feedback or concerns they have in relation to the proposed redundancy, it is best practice for you to take 24 hours to consider this feedback before proceeding with your decision.

In the midst of an employer’s obligation to consult with affected employees, comes the obligation to consider redeployment. Keep an eye out for our next article and the last requirement you need to adhere to before effecting a compliant redundancy process!

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 3: consultation obligations

What should businesses be doing?

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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