The Who’s and Why’s of Redundancy

The often complex and difficult process of implementing redundancies can put significant financial and personal stress on both employers and employees.

Once the decision to begin the redundancy process has been made, and employees have been consulted about proposed workplace changes, it is necessary to select who will be made redundant, establish why they will be made redundant, and to set out how to proceed with the redundancy implementation.

When selecting which employee(s) should be made redundant the following considerations are important:

  • Remember that redundancy refers to a position or role being made redundant, not a person. This can result in the loss of valuable skills, experience and knowledge as well as costly redundancy payouts. Options such as redeployment or retraining might be considered to ameliorate financial and personal costs for both employees and employers.
  • Consider employee responses to initial redundancy consultations. Early retirement, taking accrued holiday leave, or voluntary redundancy should be thoroughly discussed and explored together with redundant employees.

When considering why employee(s) should be made redundant the following should be addressed:

  • Demonstrate solid and reasonable reasons for redundancies. Retrenchment can be a time of significant personal uncertainty – explaining to affected employees that they will be made redundant due to cost-cutting measures or functional efficiency improvements, for example, can relieve feelings of personal accountability.
  • A common and often costly legal mistake employers make is assuming that poorest performers are first to go. This is not necessarily the case when implementing redundancies and may result in successful unfair dismissal claims. Redundancy should not depend on performance – it is not the employee but the position which is redundant.​

When considering how employee(s) should be made redundant the following should be addressed:

  • Consulting with employees at all stages of the redundancy process is crucial, and is often made a mandatory obligation in modern Awards and Enterprise Agreements. Ensuring that each affected employee is adequately consulted, informed and heard at each stage of the process can help ease a stressful situation for all parties.​
  • Follow correct legal procedures. Strategies such as giving redundant employees the correct amount of notice, communicating with them openly and reasonably, and providing them with a timeline of events that outline how the redundancy implementation will affect them, can help avoid future potential litigation and financial penalties.
  • Options for redeployment. Redeployment can be a complex and difficult process. Employers must consider a number of factors when considering redeployment, including:
    • Is the redundant employee able to perform an available alternative position? Do they require further training?
    • Does the redundant employee want to be redeployed? Factors such as longer travel times to work, lower remuneration or status, or fewer working hours might affect an employee’s willingness to be redeployed. It should not, however, be assumed that an employee will not accept such conditions.
    • Is there a definite job available to the redundant employee? Asking redundant employees to apply and compete for a position does not qualify as redeployment

In conclusion

When considering redundancies in the workplace, employers should remember that the nature of a business will determine how a redundancy is decided, how it is discussed with employees, and how it will be implemented. It is always recommended that employers consult legal practitioners before making any concrete decisions to help minimise workplace disruption and potential future legal action.

This article is written by Shane Wescott and was first published on the Patron Legal Lawyers website.

For quick legal advice from Shane Wescott, you can choose a Quick Match or browser Our Lawyers.

This article does not constitute legal advice or a legal opinion on any matter discussed and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and practice in this area. If you require any advice or information, please speak to practising lawyer in your jurisdiction. No individual who is a member, partner, shareholder or consultant of, in or to any constituent part of Legally Yours Pty Ltd accepts or assumes responsibility, or has any liability, to any person in respect of this article.

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