Redundancy selection and process - a question of fairness

Analysis

Redundancy selection and process - a question of fairness

An employee whose position becomes redundant is normally excluded from any relief under unfair dismissal legislation.

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An employee whose position becomes redundant is normally excluded from any relief under unfair dismissal legislation. While in the ordinary course of events it may be that a redundancy genuinely occurring would not come within the scope of unfair dismissal legislation, industrial tribunals have ruled that although a position is redundant, the dismissal may still be considered to be harsh, unreasonable or unjust.

There are certain obligations placed on an employer that require reasonable actions in the process surrounding a position or positions becoming redundant and the treatment of the affected employee(s). For example, it may be that in selecting employees for redundancy an employer unilaterally decides to terminate an employee of long and exemplary service over another employee. This redundancy may be justified but there is possibly unfairness against the employee selected.

The process

An industrial tribunal, in a particular case, may conclude that the redundancy of an employee and/or the process leading up to it, was unfair. There may also be a requirement under the relevant industrial instrument for the employer to engage in a particular process when a definite decision has been made that redundancies will occur. Industrial tribunals have determined the principles to be applied when considering whether a redundant employee has been fairly treated.

Failure of the employer to comply with all of these obligations might not necessarily warrant a finding against the employer, however, an employer should consider each of the obligations to determine its relevance in a particular redundancy situation. These obligations include:

  • Give reasonable notice to employees and/or their unions - the minimum period of notice is provided by the relevant industrial instrument, or in any case, s.170CM of the Workplace Relations Act 1996 [Cth];

  • Adequately consult with employees and/or their unions on the impact of the proposed changes - this is particularly important where the relevant industrial instrument prescribes a consultative process to be observed by the employer;

  • Explore genuine alternative options for redundancy, such as redeployment or relocation - where an employer is successful in obtaining suitable alternative employment for an employee, severance payments are not normally payable;

  • Ensure such options are fairly offered to the affected employees - this is similar to the objective criteria regarding selection of an employee(s) for redundancy;

  • Provide reasonable standards of redundancy benefits - the scale of severance payments is normally determined by the relevant industrial instrument and can vary depending on the jurisdiction;

  • Provide appropriate ancillary services, such as time off to seek alternative work, retraining opportunities, outplacement services, or financial planning - a common provision in redundancy clauses within industrial instruments allows the employee a day off with pay to seek other employment opportunities;

  • Ensure employees nominated for redundancy are fairly selected on an objective and unbiased basis - usually this means referring to the skills, experience, training and performance of individuals compared to the current and future needs of the organisation.

Employee obligations

The employee needs to be actively seeking a commitment to employment or cooperating with the company as to future employment. The employee cannot use the circumstances in an attempt to gain severance payments based solely on the employee's refusal to accept a reasonable offer of employment.

Transfer to lower position (redeployment/demotion)

The redundancy clause in an industrial instrument usually provides that an employee transferred to lower paid duties as a consequence of a redundancy is entitled to the same period of notice or is paid the difference between the current wage rate and the lower rate for the equivalent period in lieu of notice.

If, however, there is a substantial reduction in the employee's wages as a result of the lower paid duties, the offer of alternative employment within the organisation, where challenged by an employee, may be regarded by an industrial tribunal as unsuitable and, therefore, deemed to be a dismissal with an offer of re-engagement in a lower paid position.

Related

Termination and Redundancy

 

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