Redundancy – your questions answered

Redundancy – your questions answered

5 June 2018 Alison Williams, managing editor of our sister site HR Advance, answers some common redundancy questions.

How long should you allow for the consultation process?

This depends on the number of people who are being made redundant and whether redeployment is a possibility.

It’s not possible to prescribe a one-size-fits-all solution for every business, but note that consultation must commence as soon as possible after the decision to undertake a redundancy has been made.

What criteria do you suggest is used/considered when selecting what positions will be made redundant?

An employer should refer to the skills, experience, training and performance of individuals compared to the current and future needs of the organisation. If, after such an assessment, employees are found to be comparatively equal, the period of service may be an appropriate factor.

An employer must not make decisions that may result in a breach of an employee's workplace protections including factors such as unlawful discrimination, choice to exercise or not exercise a workplace right (such as a right or entitlement under an industrial agreement, the right to make a complaint or inquiry about a workplace right or in relation to their employment or initiating or participating in a process under a workplace law or agreement), the right to engage in (or not engage in) industrial activity and rights to be free to enter into or not enter into individual flexibility arrangements.

If we employ under 15 employees (as per award) is two weeks' notice required instead of the redundancy notice period?

Where an employee is made redundant, an employer is required to pay a redundancy payment. If an employer has less than 15 employees it may be exempted from the requirement to pay redundancy pay. Some modern awards require some type of redundancy payment to be paid to employees of small business so if you are a small business (less than 15 people employed at the time of termination) it is advised that you check your relevant award.

In addition to the redundancy payment, all employers regardless of size are required to pay employees any accrued annual leave entitlements and, where eligible, accrued long service leave. A notice period will be as required by the relevant award or the National Employment Standards which may be paid in lieu if preferred.

Is an employer obliged to pay redundancy benefits to staff whose contracts are being rolled every year (i.e. salary tied up with a three-year grant).

Redundancy pay is not payable when an employee completes a specified time or specified task contract and the employment ends at that specified time. If a contract is extended, a new contract should be issued with a clear finish date. However, please note this important decision on the use of fixed-term contracts:

Is a consultation period compulsory?

Modern awards contain a ‘standard’ provision that places an obligation on an employer to consult with employees regarding major workplace change. Most redundancy situations would thus require consultation. Failure to implement a proper consultation procedure may result in a claim of unfair dismissal because, for example, the selection criteria used to identify which employee(s) were to be made redundant was subjective and discriminatory.

If you have made your decision on making certain employees redundant, and you consult with them after the decision, and then communicate that decision, would that be considered "consultation"?

The model consultation clause in modern awards requires that as soon as practicable after making its decision, an employer must:

(a) discuss with the relevant employees

(i) the introduction of the change; and

(ii) the effect the change is likely to have on the employees; and

(iii) measures the employer is taking to avert or mitigate the adverse effect of the change on the employees; and

(b) for the purposes of the discussion, provide, in writing, to the relevant employees:

(i) all relevant information about the change including the nature of the change proposed; and

(ii) information about the expected effects of the change on the employees; and

(iii) any other matters likely to affect the employees.

This could technically be achieved through one conversation provided an employer has met its obligations to provide sufficient information about the change, its likely effect and any considerations given to mitigating that effect. Sufficient time needs to be incorporated to allow an employee response to be provided and any response to be considered by an employer prior to implementing the decision.

Long term casuals – are they entitled to redundancy?

If an employee is a true casual he/she is not entitled to redundancy payments.

If a person is a member of a union, but the workplace isn't unionised, do you need to consult with the union?

The union should be included in the consultation only if an employer has decided to make 15 or more employees redundant, and one or more employees are union members and the union is entitled to represent those employees’ industrial interests.

These questions were submitted to a recent HR Advance webinar on redundancy.

Alison Williams is the managing editor of HR Advance. She has more than 25 years' experience in the areas of human resources, industrial relations and employment law. She writes for HR Advance, WorkplaceInfo and WorkplaceOHS. Alison has a Masters Degree in Employment Relations from the University of Western Sydney.

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