IR – Redundancies must be Genuine to defend unfair dismissal


Inviting an employee who is being retrenched to apply for one more position doesn’t make up redeployment, and may mean the company fails the Fair Work Act’s “actual redundancy” evaluation, Kemp Strang attorneys told a recent breakfast briefing in Sydney.

Redundancy is “the form of thing people often just think about when there are terminations occurring”, Godding said.

“But it’s essential to notice that redundancies occur for a variety of motives – not merely financial issue, but also technological change, reorganisation, mergers and acquisitions… and having been inside this game for a really very long time, I will let you know the ebb and flow of redundancies never appears to cease.”

Sources of redundancy entitlements

But, it’s becoming “increasingly common” for employers to either issue standalone redundancy policies or to comprise one in the HR guides they give workers, he said.

Even should a redundancy policy is really not an express term within the worker’s employment contract, it may be considered an implied term if, for example, workers have access to and are conscious of it, and it’s been used it to pay out staff within yesteryear.

Modern awards also contain provisions, Urry said.

The majority just reference the NES, however they also “go a little further”, addressing issues including transfers to lowerpaid duties; what to do once an employee leaves during a notice period; jobsearch entitlements; and the preservation of older, more favourable entitlements.

When determining a worker’s entitlements, it’s essential to notice their span of service before 1 January 2010 is only applicable if they had a preexisting entitlement to redundancy, he said.

Severance payment exceptions

“But the word ‘adequate’ can’t be defined by the company or the worker, it really must be defined objectively,” she said, in light of variables like the nature, place and pay of the brand-new job.

Genuine redundancy

This could function as a defence to a subsequent unfair dismissal claim, if a man is dismissed due to a true redundancy, Urry told the briefing.

“But you really need to meet some elements, also it’s not just simple to accomplish,” he warned.

The foremost would be to comply with consultation obligations in a modern award or business agreement. “If you don’t consult even one employee beneath a contemporary award, you automatically haven’t complied with the real redundancy test,” he warned.

“You must also tick the box in terms of redeployment. Then you definitely fail the evaluation, should you pass up on one of these elements. It doesn’t mean it’s automatic unfair termination, it only means you don’t have the skill to utilize the actual redundancy defence.”

Earlier this year FWA found an HR manager whose obligations were split among existing line supervisors and a just-hired HR coordinator in a restructure was not unfairly dismissed.

The court accepted the restructure was a crucial costcutting measure, which the HR coordinator, who just had some of the former supervisor’s obligations and was working at a lower degree, was doing another occupation.

In another recent unfair dismissal case, a logistics manager was retrenched after his company implemented a brand new electronic system.

“Because of that they needed someone with tertiary qualifications to perform the work, so the initial job no longer existed,” Corbett-Burns said.

However, FWA found the company’s actual redundancy defence failed because it didn’t consult the worker.

“But they didn’t do that, nor did they consult him at any moment prior to the judgment of dismissal, so that they certainly failed [the evaluation for]real redundancy,” she said.

Finally, a case from this past year, involving several miners whose positions were made redundant, illustrated the significance of “busy” redeployment.

“The company was part of the group with several other companies that ran similar mines in the exact same state, and there were jobs going in some of these companies.”

“Even though two of these workers were successful and got jobs within the group, it was found that not one of them had really been redeployed. Redeployment must be more active; [it]actually means transferring the worker,” she said.


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