There are a number of pitfalls for employers when it comes to redundancy. Each case must be handled sensitively so as to avoid a claim for unfair dismissal.
And it certainly can’t be used as a means of dismissing an employee for reasons relating to performance or conduct.
What is a genuine redundancy?
A case of genuine redundancy is when:
- The employer no longer requires the person’s job to be performed by anyone due to changes in the operational requirements of the employer’s enterprise; AND
- The employer has complied with its consultation obligations in relation to the redundancy of that employee.
Have you considered redeployment?
The dismissal of an employee CANNOT be a case of genuine redundancy if it would have been reasonable in all the circumstances to redeploy the employee to another department which fits the employee’s skillset within the employer’s enterprise (or that of an associated entity).
Have you discharged your consultation obligations?
There are strict protocols enforced by the Fair Work Commission which govern the consultation process in respect to the redundancy of an employee.
An employer’s obligations in respect to the consultation process depends on the relevant award or enterprise agreement and therefore it is best to consult a legal specialist in relation to these obligations.
Is redundancy the only option?
Redundancy can be quite distressing and an emotional time for an employee, and the employer often walks a fine line in relation to what is a case of genuine redundancy and what is a case of unfair dismissal.
As a consequence, we see a number of claims from employees who assert to have been unfairly treated when it comes to being made redundant.
The question that the Fair Work Commission must then answer is whether it was a case of genuine redundancy or an excuse to get rid of the employee.
In each case, the employer must consider whether redundancy is the only option.
Other implications for the business
It is also important to keep in mind that redundancies can have a flow-on effect in the workplace as well, and employers should be mindful of decreasing employee morale for fear of the “domino effect”.
Pay and Tax obligations
There are a number of pay and tax obligations for employers to follow when making an employee redundant.
Adding to their normal entitlements in their final pay such as outstanding wages and accumulated annual leave, employees may be entitled to accrued or pro rata long service leave, payment in lieu of notice and redundancy pay.
If the requirements of the Fair Work Act are not met in relation to the redundancy process, an employee may be able to bring a claim for unfair dismissal.
It then becomes the role of the Fair Work Commission to determine whether this dismissal was made in harsh, unjust or unreasonable circumstances.
Defending unfair dismissal claims can be an expensive process, particularly if the employee has an arguable right to bring the claim.
Therefore, it is best to consult a solicitor knowledgeable in employment law such Daniel Morgan of Morgan + English Commercial Lawyers before to beginning the redundancy process.
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