Employer Obligations when implementing redundancies
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Employer Obligations when implementing redundancies

Employer Obligations when implementing redundancies

The redundancy process is complex and, if the proper process is not followed, there is a high chance that employers will fall short of meeting the requirements of a genuine redundancy. Getting the process right is important, as employees will fail in an unfair dismissal claim if their dismissal was a case of genuine redundancy.

Under the Fair Work Act 2009, the following criteria apply in cases of redundancy:

  1. The employer no longer requires the person’s job to performed by anyone because of changes in the operational requirements of the enterprise; and
  2. The employer has complied with any obligation under a modern award or enterprise agreement to consult about the redundancy; and
  3. It is not reasonable in all the circumstances to redeploy the employee in either the employer’s enterprise or an associated entity of the employer.

In a recent case heard by the FWC[1], four Staples workers were reinstated and awarded backpay after it was found their employer failed to meet its consultation and redeployment obligations, and instead implemented a speedy, hasty and "astonishingly fast" redundancy process. Staples announced that redundancies would be implemented to address their $1mil budget overrun and that affected employees would be assessed by a "selection matrix". However, only two days later, a total of 12 employees were informed they were being made redundant.

Four of the affected redundant employees disputed the decision, claiming that their dismissals were not cases of genuine redundancy. The employees referred to the obligations of consultation under the enterprise agreement, which required Staples to consult with its employees and their representatives in circumstances of restructure. The employees submitted that the speed of the process with which redundancies were decided and implemented was inconsistent with the company’s consultation obligations.

Moreover, the employees argued that Staples failed to properly explore reasonable redeployment options. The redundant employees could have been redeployed given that 19 new permanent warehouse employees were employed under the "new hires" obligation in the Enterprise Agreement. In addition, it was submitted that the employees were not afforded the opportunity to challenge the basis for their selection and therefore there was a fundamental denial of natural justice and procedural fairness.  All in all, Commissioner Cambridge described the process as “severely flawed” and criticised Staples for the “manifest injustice” placed on their affected employees.

As evident from the case, employers have to go further than simply informing their employees that redundancies may be carried out. Rather, genuine and meaningful consultation with affected employees and their representatives is vital. Even though consultation takes time it must be completed  before a final decision on redundancy of employees affected by a restructure is made. Usually, a single meeting with the affected employees will not be enough. In meetings (and later confirmed in writing), employees are to be provided with information regarding:

  • Details of the proposed major workplace change
  • Whether or not alternatives were considered/feasible
  • Proposed method of selecting the employees who may be made redundant
  • Possibilities of redeployment
  • Opportunities for employee input and views.

Lessons for Employers

  • Consider your obligations under the relevant award/enterprise agreement in order to satisfy the requirement for a genuine redundancy i.e. the need for consultation and exploring re-deployment options.
  • Remember consultation must be genuine and employees must be afforded the opportunity to discuss their views on the change.
  • If redundancies are to be implemented, ensure all affected employees are paid out their outstanding entitlements and redundancy pay accordingly.

 


[1] Paul Williams and Ors v Staples Australia Pty Ltd [2017] FWC 607 (3 February 2017)