What Is Redundancy?
Sometimes an employer will no longer require an employee’s job to be done by anyone. This is known as a redundancy. Reasons for redundancy can be the result of introduction of new technology, changes to the market (ie. lower sales or production), changing operational demands as well as the general need to increase efficiency and reduce costs of doing business.
In those circumstances, the law offers significant protection to employees exposed to the proposed changes. In most cases, the law not only requires the employer to have a valid reason for making the decision, but also requires them to follow numerous procedural steps to implement the redundancy.
A redundancy is only exempt from unfair dismissal when the redundancy is genuine.
A redundancy is genuine when:
- the employer no longer requires an employee’s job to be performed by anyone because of changes in the operational needs of the employer’s business
The redundancy is made in compliance with the terms and conditions of a Modern Award or enterprise agreement that applied to the employment to consult about the redundancy
A redundancy is not genuine in circumstances where the employer:
- hires someone else to do the same job as the employee who was dismissed
- has not properly communicated with the employee and given fair notice under the Modern Award or agreement
- has not made a reasonable effort to replace the staff member to another position in the company or explored other alternatives to redundancy
If an employer is unsure whether the redundancy is genuine or not, they should seek expert advice from a qualified practitioner or work relations specialist.
To ensure a business not only satisfies its obligations, but avoids unnecessary disputes by troublesome employees, it is recommended that a formal consultation process is undertaken, which should be documented accordingly.
An employer should not tell an employee that they have made a definitive decision until consultation has been completed.
Consultation (Initial)
Typically consultation commences with a discussion with an employee outlining that the business is considering making that person’s job redundant. Following this discussion, the employer should invite the employee to a formal meeting to discuss the possibility of redundancy in more depth and, particularly, possibilities of re-placement and alternatives which may save the employee’s position.
It is a good idea to keep a record of any invitations to redundancy meetings and follow each meeting up with a written summary.
Consultation (Subsequent)
At the formal meeting, the employer would ideally consult regarding the redundancy process, explain how the selection will work, explore options for redeployment and alternatives to redundancy.
What amounts to a reasonable deployment depends on the facts of the case and advice should always be taken on specific circumstances.
In many cases, to properly satisfy its obligations, a business may be required to meet on more than one occasion.
Confirmation
If, subsequent to a fair process having been conducted, it is determined that the outcome will be redundancy, a final meeting should be convened. At that time, the employer should deliver a preliminary outcome.
Following confirmation of redundancy, a formal letter of redundancy should be issued to the employee.
What to Include in a Letter of Redundancy
The information contained in a letter of notification of redundancy should:
- provide an overview of the situation generally (eg. the reason why the redundancy is being considered)
- provide an outline of the process that has been followed (steps of consultation)
- confirm that the employer has reviewed other areas in the business and that there are no suitable vacancies or opportunities for redeployment
- confirm that there is no suitable alternative to avoid the redundancy
- clearly state that the position is being made redundant and explain the reasoning behind the decision.
- specify the last date of the employee’s employment with the company
- break down the monetary entitlements the employee will receive and specify when they can expect to receive them (i.e. annual leave, overtime, long service leave)
Employsure advisers are experts in matters concerning redundancy and in regards to writing letters of redundancy. If you have any questions about what to include in a letter of redundancy, please call us for peace of mind on our Advice Line on 1300 207 182.