The Fair Work Commission’s workload is up by over 40% compared to the same time last year, largely due to increases in dismissal cases and stand down and Jobkeeper disputes. It is clear that many employers are making structural changes to their businesses during the Covid crisis. Many employment terminations are taking the form of redundancies. Caution should be exercised because redundancy is not a short term solution and employers leave themselves open to claims including of unfair dismissal.
If considering making one or more positions redundant, the first question to ask is whether the proposed redundancy is genuine. Where the employer decides that it does not wish a job (which does not always mean all of the duties of that job) performed by the employee to be performed anymore, or proposes to redistribute the duties of the job amongst other employees, the position may be made redundant. The important thing about redundancy is that it relates to the position itself rather than the person holding the position. An employer should be able to demonstrate financial grounds for termination and a record of the rationale for the selection of particular positions. In addition, an employer should consult with employees about proposed redundancies by inviting their views about minimising the impact of the proposal and taking those views into account before a final decision is made (this is compulsory for award covered employees). Lastly, an employer is required to consider whether there are any other suitable positions open within the business for redeployment.
There are other markers to look for which might require further investigation before a decision to terminate is made. These may be relevant to the issue of whether the redundancy is genuine, either for unfair dismissal or breach of general protections/discrimination claim purposes:
• Does the person hold any legislative role such as being an Occupational Health and Safety Representative?
• Has the person been involved recently in any enterprise bargaining, industrial or OHS activity?
• Have there been any issues recently involving the National Employment Standards (eg, the taking of leave, requests for flexible working arrangements, refusal to work overtime)?
• Are there any facts that might raise issues of unlawful discrimination (eg, on the basis of age, race, political affiliations, disability etc)?
• Has the employee had any recent workers compensation claim?
• Has the employee made a complaint or enquiry about employment recently.
Covid markers also need to be considered, including:
• Has an employee had to take personal/carers leave for Covid reasons?
• Have family responsibilities affected an employee’s performance?
• Are there issues concerning working from home or returning to the workplace (which may be work health and safety related)?
• Are there any issues concerning Jobkeeper directions (eg to work more or less days and hours and related payment issues)?
Whilst employers are fairly able to restructure their businesses, particularly to deal with economic circumstances, caution should be exercised before making significant restructuring decisions. Once a decision to make a position redundant has been made, notice should be given to the employee or paid in lieu and payment of redundancy pay made in accordance with contractual or statutory requirements (whichever is the greater). The statutory requirement to pay redundancy pay does not apply if the employee has less than 12 months continuous service or if the employer is a “small business employer” with less than 15 employees. If an employer receiving Jobkeeper payments is paid in lieu of notice then payment should be made at their full rate.
A failure to follow this process and consider these matters may result in legal claims being made which may take time, money and emotional investment to resolve. Please contact us if you would like any further information or help.