Redundancy Overview

A termination of employment due to redundancy is a form of dismissal by the employer, and carries with it the concept of involuntary termination of the employee's employment. Redundancy is usually caused by factors such as economic conditions, business efficiency, or technological developments. Generally, termination of employment due to redundancy occurs where an employer has made a definite decision that they no longer wish the job the employee has been doing to be done by anyone; and that decision leads to the termination of the employee's employment.

With the advent of the Fair Work Act 2009 there are some additional considerations that employers will need to take into account. Under the Fair Work Act 2009, a dismissal will not be unfair where an employee's dismissal was a case of a genuine redundancy, and a redundancy will be genuine if the job will no longer be required to be performed by anyone because of the changes in the operational requirements of the employer's business and the employer has complied with any obligation for consultation that is contained in an applicable modern award or enterprise agreement.

For employers it will be necessary to ensure that certain things have been done to ensure that a redundancy was 'genuine" and thereby avoid the risk of an unfair dismissal claim.

Before terminating employees due to redundancy, employers must consider if it is reasonable in all the circumstances for the employee to be redeployed either within the employer's enterprise or within the enterprise of an associated entity. Also, when selecting employees for redundancy, take appropriate care by using objective selection criteria in order to avoid possible unlawful discrimination claims.

Employers should keep records of why each redundancy was necessary, details of what consultation was conducted, and any attempts made to re-deploy employees or to provide alternative jobs.

These are only some of the issues employers need to contend with if they are considering redundancies. In addition, there are requirements when you are terminating the employment of 15 or more employees, if any of the employees is a member of a union, and from 1 January 2010, mandatory severance pay is payable on redundancy to eligible employees, however, there are certain exemptions from that obligation.

It is essential that employers ensure that they have complied with any relevant requirements contained within their awards and agreements, and if employers are unsure of the circumstances that constitute a redundancy, they should seek appropriate advice PRIOR to making a decision.

Articles are intended to provide commentary and general advice only and should not be relied upon as legal advice.

Go to our IR Solutions page to see how Integrated HR Solutions can assist you ....