While employers often have a good reason for making a position redundant, and pay the person correctly, they leave themselves exposed by not ticking all the ‘procedural’ legal requirements. This can result in the Fair Work Commission ruling the redundancy was not genuine.
Employers must follow the prescribed redundancy procedures in the National Employment Standards (NES) or relevant Enterprise Agreement.
While many employers appear to follow the technical requirements in relation to paying employees correctly in a redundancy situation, some are missing a key procedural requirement. The consultation procedure has provided serious difficulties for some employers.
The Fair Work Act and Agreements contain a clause titled ‘Consultation About Major Workplace Change’. In summary, it requires employers to consult with employees where they are making major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees.
The employer must inform the employees of the changes, and their likely effect, as well as measures to avoid or reduce the adverse effects of the changes on employees. This can be quite difficult.
In a restructuring situation the loss of jobs is always a ‘significant effect’.
Employers who ignore this step, make an employee redundant and terminate their services, are exposed in any subsequent unfair dismissal claim by the employee.
The Fair Work Commission has ruled against employers in unfair dismissal proceedings where they have not undertaken consultation as required in the Act or Agreement.
The obvious response from employers is that consultation would not have many any difference as there were no other positions available. The Commission has determined that failing to consult as required may result in a decision that the redundancy was not genuine.
Thereafter the Commission will look at the individual facts in a matter to determine whether it was harsh, unjust, or unreasonable.
Employers exercising the redundancy process in their Agreement or the NES resulting in terminations, should do so with the same amount of rigour as they do when dealing with a performance termination.
Employers do not have the privilege of getting it ‘mostly right’. Some parts of the process are essential and, if missed, can result in a decision against them despite ticking all the other boxes.
Contact Hunter Employee Relations to assist you with restructuring and potential redundancies to minimise your exposure in any potential Fair Work Commission proceedings.
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Kind Regards
Michael Schmidt
M 0438 129 728
www.hunteremployeerelations.com.au
Industrial Relations - Employment Law - Workplace Performance
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