16 March 2023

Organisations cutting staff: A reminder of genuine redundancy obligations

Employers should be aware of what constitutes a genuine redundancy, and the steps that they must follow.
Australia Employment and HR
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Over the past year, there have been several large-scale redundancies at some of the biggest global organisations, including in Australia. The approach taken by some of these organisations has attracted significant media attention. This has often been due to the scale of the redundancies, and the nature of communicating the redundancies (often by email or a single Zoom meeting).

In the current climate, where organisations are undergoing major restructures that are bound to lead to genuine redundancies, it is pertinent for employers to brush up on what constitutes a genuine redundancy and the steps they must follow.

  1. What is a genuine redundancy?

The Fair Work Act 2009 (the "FW Act') describes an employee's redundancy as genuine if the employer no longer requires the employee's job to be performed by anyone because of its operational changes. Further, the employer has consulted with the employee as required under any applicable modern award or enterprise agreement.

If it would have been reasonable for the person to be redeployed within the organisation or an associated entity, then the redundancy will not be considered to be genuine.

  1. Consultation

With respect to employees covered by a modern award, the first step for an employer undergoing a restructure is to consult with its workforce. Consultation includes:

  • giving notice of the organisational changes to all employees who may be affected;
  • having discussions with affected employees about the introduction of the changes, their likely effect on employees and measures being taken to reduce adverse effects of the changes on employees; and
  • commencing discussions as soon as practicable after making a definite decision.

In addition, employers must provide information about the changes in writing, including details about the nature of the changes, their expected effect on employees and any other matters likely to affect the employees.

For employers that are covered by an enterprise agreement, the agreement will provide guidelines for consultation about major workplace change.

For employers that are not covered by a modern award or an enterprise agreement, consultation is not strictly necessary, but forms part of a best practice approach.

  1. Additional steps for mass redundancies

There are additional requirements for employers terminating the employment of 15 or more employees by way of redundancy. These include providing written notice of proposed redundancies as soon as practicable after making the decision and prior to carrying out the redundancies, to:

  • the Chief Executive Officer of Centrelink; and
  • each registered employee association ("Union") of which any employee was a member, and that was entitled to represent the industrial interests of that employee.

The written notice must set out the reasons for the redundancies, the number and categories of employees likely to be affected and the period over which the employer intends to carry out the dismissals.

The employer must also provide Unions with an opportunity to consult with them on measures to minimise the proposed redundancies and mitigate their adverse effects, as soon as practicable after making the decision and before carrying out the redundancies.

  1. Key Steps

To ensure that they comply with the FW Act and applicable modern award (if any), employers should do the following:

  • identify the employees that will be affected by an operational change;
  • if it is more than 15 employees, provide a written notice to Centrelink and any Unions as soon as practicable;
  • consult with any Unions with respect to measures to minimise the redundancies and/or their effects;
  • provide each affected employee with a letter that sets out the organisational changes, how they will be affected, and asks for their input on issues such as redeployment or alternatives to redundancy;
  • meet with each employee to discuss the letter and their responses;
  • meet with the employee again to inform them of the employer's decision regarding their employment; and
  • provide the employee with a further letter confirming the decision in writing.
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