Redundancy — selection criteria


Redundancy — selection criteria

How should an employer go about selecting the employees to be made redundant, in a situation where a number of positions are to be axed?


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How should an employer go about selecting the employees to be made redundant, in a situation where a number of positions are to be axed?
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Q  Because of a downturn in business, our company has decided that a number of positions in our production area will need to be made redundant. That area currently employs approximately 80 employees, and an estimated 20 positions have been earmarked for redundancy. As part of the selection process, our production management has identified those employees whose position will become redundant. All of the positions to be made redundant are similar in status, pay and responsibility, with the main differential being the length of service of each individual. Also, one of the employees is pregnant.
While there are several employees the company would wish to terminate due to performance issues, what would be regarded as the fairest criteria on which to justify selecting which positions are to be made redundant?
A  The factors determining which positions are to be redundant should be determined on objective criteria and should be known by the employees in advance as part of the consultation process required under modern awards with respect to significant changes in the workplace, or in compliance with the relevant company policy.

The 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, unless some other pressing domestic issue is raised by an individual. See: Quality Bakers of Australia Ltd v Goulding [1995] IRCA 305.

The employee who is pregnant does not have any special protection in this circumstance, although the employer cannot dismiss the employee if her selection for redundancy was based on grounds relating to her absence on parental leave (ie discriminatory reasons). It should be noted that in relation to a claim by an employee under the ‘general protections’ provisions of the Fair Work Act 2009 (eg termination on the grounds of the employee’s absence on parental leave) there is a reverse onus of proof (ie the onus is on the employer to rebut the claim).
Therefore, it is important that as soon as the objective criteria has been determined by the company, it is applied equitably.
Avoid subjective criteria
The employer should not use subjective criteria when selecting employees for redundancy, because this approach is open to abuse and could be used to target particular workers. Referring to factors such as ‘teamwork’, ‘know-how’, ‘initiative’, ‘integrity’, ‘trust’, ‘credibility’, etc, should be avoided.
The use of subjective criteria also makes it difficult for management to apply these factors, because they may imply a different meaning depending on the individual manager. See: Kenefick v Australian Submarine Corporation [1996] IRCA 353.

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