Australia: Genuine redundancy

Genuine redundancy occurs when an employer lawfully terminates a person's job since that role is no longer relevant. Employers may also conduct this if they want to restructure their company's operations. The reason for the redundancy is considered "genuine" if it is not related to the individual performance of the employee. A redundancy is not genuine if the employer:

• Still needs the employee's job to be done by someone else
• Could have given the employee another job within the employer's business
• Has not complied with the consultation requirements outlined in the relevant Modern Award, enterprise, or other registered agreement.

In such cases, the employer may be required to provide the particular employee with severance pay or other benefits. Employees may feel like they have been dismissed unfairly from their work even if the redundancy was genuine. So, it's important for people to seek legal advice if necessary to avoid legal matters from arising. Read on to know more about genuine redundancy.

What Does the Fair Work Act 2009 Say?

The Fair Work Act of 2009 governs the relationship between employers and employees in Australia. The Act establishes minimum rights and obligation imposed on both parties in a workplace setting. Additionally, the Act aims to promote fair and productive workplace relations. Section 328 of the Fair Work Act states that a case of genuine redundancy is true if:

• The employer no longer requires the dismissed role to be performed by anyone else due to changes in operational requirements.
• The employer has provided a consultation process about the redundancy imposed by an applicable modern award or enterprise agreement.
• It would not have been reasonable to redeploy the affected employee within the employer's enterprise or the enterprise of an associated entity of the employer.

When Is Genuine Redundancy Lawfully Acceptable?

1. New Technology

Technology has been always helpful to mankind in many ways. This includes improving people's quality of life, especially in education, transportation, healthcare, communication, and even entertainment. Unfortunately, technology can also lead to a person's dismissal and replace them in their position. Such certain circumstances may include:

• Manufacturing: Automated assembly lines, robots, and 3D printing have replaced human workers in many manufacturing industries, including automotive and electronics manufacturing.
• Retail: Self-checkout machines, automated inventory systems, and online shopping have replaced many cashiers, stock clerks, and sales associates.
• Transportation: Self-driving vehicles and drones have the potential to replace truck drivers, delivery workers, and taxi drivers.
• Data entry: Software programs and machine learning algorithms have replaced many data entry workers, who previously manually entered information into databases.
• Customer service: Artificial intelligence-powered chatbots and virtual assistants have replaced human customer service representatives in many industries, handling simple inquiries and tasks such as answering frequently asked questions.

2. Business Slows Down

Slow business equates to low income, in which, employees receive almost little to no salaries. A slow business can be a reason for genuine redundancy if the decreased demand for the company's goods/services results in a company workforce reduction. Hence, companies may have to eliminate positions that are no longer necessary due to decreased demands or services.

However, it is important for the employer to follow a fair and reasonable process in selecting employees for redundancy. This means they should take into account factors such as the employees' skills, experience, and performance. The employer must also provide appropriate notice or compensation/termination payment in lieu of notice to the employees.

3. Business Relocated and Closed Down

Slow business can also lead to the business closing or relocating in a better place. A business that is closing down may dismiss employees. This is the same for businesses that need to relocate, but with employees who cannot comply with the move.

4. Restructuring

Restructuring of a company can lead to a genuine redundancy. This may include downsizing, merging, or automation of certain tasks. Restructuring can lead to the elimination of positions that are no longer needed, resulting in true redundancies. In such cases, affected employees may be eligible for redundancy compensation under their jurisdiction's employmentand tax law.

Minimum Notice Periods

Employers should be responsible for providing written notice to their employees before they terminate them due to genuine redundancy. This notice should be given in writing and should specify the date on which the employment will end. The notice should also include the employee's entitlement to redundancy pay.

The National Employment Standards (NES) determine the minimum notice period based on the number of years the employee has worked for the company. All modern awards and registered agreements require employers to consult with employees about major workplace changes that may affect employment. Employers are required to:

• Inform any employees who may be impacted by the proposed changes.
• Provide relevant employees with information about the changes and their expected effects. This includes the possibility of redundancy;
• Inform their employee about how to mitigate the negative effects of the proposed changes and termination payments; and
• Consider the suggestions of employees regarding the changes and the impact on their employment.

Here are the minimum notice periods according to the NES:

Note: The period of notice will usually be determined by the applicable industrial instrument. This includes the contract of employment even if the contract is unwritten.

Genuine Redundancy: Redeployment

An employee's dismissal cannot be considered genuine redundancy if it would have been reasonable in all the circumstances to redeploy them. Employers who fail to offer redeployment to redundant employees may face legal consequences. The question of whether redeployment is reasonable is dependent on a variety of factors. These are:

1. Employers must explain why they did not provide options for the employee to continue employment. They must also provide alternative roles for them if the employees were laid off. If not, dismissed employees may file for an unfair dismissal claim or tax free redundancy payments.

2. There must be a vacant job for which the redundant employee possesses the necessary skills and competencies to work immediately. Employers may also provide a reasonable period of retraining if the employee can vacate a new position.

3. The other positions must be suitable in terms of compensation, duties, seniority, location, and any other factors that distinguish it from the role being replaced.

Note: Needless to say, it is always best to discuss the tax treatment of termination payments with an employment lawyer.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.