Every now and again, business owners need to make big decisions that could negatively impact the lives of their employees. Sometimes, these decisions may involve cost-cutting which results in terminating certain positions or making an employee's position redundant.
But, did you know that an employee who has more than one year of constant service is protected by law against being unfairly dismissed? Making a position redundant can only be done if it is genuine. If it isn't, then an employee may be able to lodge a claim for unfair dismissal.
What is a genuine redundancy?
Genuine redundancy is when the employer no longer needs the job to be performed by anyone because of changes in the operational requirements. It can also happen if the employer followed any consultation requirements in the award or any registered agreement.
A dismissal is not a case of genuine redundancy if it has been reasonable in all of the circumstances to redeploy the employee within the employer's business. If an employer believes that an employee's dismissal is a genuine redundancy, but the employee has made an application for an unfair dismissal remedy, the employer can make a jurisdictional objection to that application.
In the context of redundancy, an employer will need to prove that there is a genuine redundancy situation. If an employer can prove that the requirements of the Fair Work Act 2009 have been met, the Fair Work Commission will have no jurisdiction to hear the unfair dismissal claim. But, if the requirements have not been met, the Commission must determine if the dismissal was unfair.
Businesses are always changing, and understandably, some changes mean that certain jobs are no longer viable. Operational changes are the most common reason why redundancies occur. These may include:
1. Where the business is restructured. This may mean that an employee's role is reallocated or divided amongst other employees. Sometimes, employers will restructure by combining two jobs into one broader role.
2. Downsizing, where businesses in financial trouble choose to lay off employees. This means that the business will reduce jobs to reduce costs, and may even determine whether they can stay in business.
3. Outsourcing, where jobs are moved to lessen internal costs externally. Moving jobs externally can be significantly cheaper than continuing to employ in-house staff.
4. Where a business closes down. This can happen if a business is insolvent or voluntarily on the part of the company's directors or shareholders. For other companies, a business owner may decide to close the shop.
When is a redundancy not genuine?
A dismissal is not a genuine redundancy if someone else is hired to do the employee's job, or if the employer has not complied with the relevant requirements to consult with employees about redundancy. Informing an employee of the decision to make their role redundant does not amount to consulting with them.
A consultation needs to occur before a final decision has been made.
It is essential to understand whether redundancy is genuine, as defined by the law. It is not uncommon for employees' positions to no longer be required, following a workplace's reorganisation or change which affects its operational requirements. Still, employers need to provide the following:
Notice of Termination of Employment
If the company is in a situation where an employee may be made redundant, the employer needs to let them know of the changes that can impact them. Moreover, they are required to consult with the employee where it affects them.
If the termination of the employment contract is inevitable, the employer must provide written notice of the employee's end of employment. Furthermore, this notice must be provided in line with the Fair Work Act 2009.
If an employee has been made redundant genuinely, the employer still needs to pay the outstanding wages for hours they have worked, accumulated annual leave, and redundancy pay.
Redundancy pay is given to the employees if the termination of their employment is a genuine redundancy. The amount is calculated using the employee's ordinary pay rate and is based on the period of continuous service of the employer.
Adams Wilson Lawyers Can Help
It is vital to get legal advice if your position has been or may be made redundant so that you understand whether it is a genuine redundancy and what your rights are.
AdamsWilson Lawyers have a history of acting for employees and a wealth of experience providing advice about termination of employment, including redundancies, and employee entitlements to individuals, small businesses, right up to some of the largest companies in Australia.