Sydney-based consultant, working in data analytics. Formerly Data Analyst at Lawpath.
As a small business owner, you will have to make incredibly tough decisions regarding your employees – and any one decision could change your employees’ lives. Sometimes, those decisions may involve lowering costs by terminating certain positions and further making an employee’s position redundant.
However, making a position redundant can only be done if it is genuine. If it isn’t, then an employee may be able to lodge a claim for unfair dismissal.
In this article, we’ll look at what genuine redundancy means and what the legal requirements are.
- A genuine redundancy occurs when a job is no longer required due to operational changes, consultation requirements have been met, and reasonable redeployment isn’t available.
- Redundancy may not be genuine if an employer replaces the role, fails to consult, or doesn’t properly consider redeployment.
- Act quickly if you suspect your redundancy wasn’t genuine keep relevant documents. Eligible unfair dismissal claims generally must be filed within 21 days.
What is a genuine redundancy in Australia?
For redundancy to be legal, it must be genuine. Fair Work Australia defines redundancy as:
- The job is no longer required because of operational changes.
- Applicable award or enterprise agreement consultation requirements have been followed.
- Reasonable redeployment within the business or an associated entity was not available.
This can happen for many reasons, including the introduction of new technology, the employer’s physical relocation, or the employer’s inability to run the business anymore.
Changes in operational requirements
Businesses are always changing, and, understandably, some changes mean that certain jobs are no longer viable. Related reasons for redundancies include:
- The business undergoes a restructuring: This may mean that an employee’s role is reallocated or divided amongst other employees. Sometimes, employers restructure by combining two jobs into a single broader role.
- Downsizing: For businesses in financial trouble, the first option is often to downsize. This means the business will reduce staffing to cut costs and may even determine whether it can remain in business.
- Outsourcing: Moving jobs to an external provider can be significantly cheaper than continuing to employ in-house staff.
- Shut down: This can happen if a business is insolvent or voluntarily liquidated by the company’s directors or shareholders. For other businesses, a business owner may simply decide to shut the shop.
Employer redeployment redundancy responsibilities
Employers need to consider whether an employee is suitable for another role within the business before proceeding with redundancy. Consider:
- Whether there are any available positions
- Whether the employee has the skills, qualifications and experience to do the job
- Where the job is located
- The remuneration for the role
Reasonable redeployment isn’t limited to a role with the same pay, status, or level of responsibility. Depending on the circumstances, it may include a suitable position with lower pay or less responsibility, as well as a role within an associated entity of the employer.
Employers should also consider suitable redeployment options rather than asking the employee to compete in an open recruitment process. Competitive applications may affect whether redeployment was properly considered and, in turn, whether the redundancy is genuine.
This is an important step in the process because if there is no genuine redundancy, an employee may have grounds to claim damages for unfair dismissal.
When is redundancy not genuine?
Redundancy is genuine only if the employer no longer requires the job. A dismissal is not a genuine redundancy if:
- Someone else is hired to do the employee’s job.
- The employer has not complied with the relevant requirements to consult with employees about redundancy. Informing an employee of the decision to make their role redundant does not amount to consulting with them. Consultation needs to occur before a final decision has been made.
- The employer could have given the employee another job within the business. This applies to redeploying the employee within the current enterprise or an associated entity.
How can you tell if your redundancy is genuine?
The following circumstances don’t automatically prove that a redundancy was unlawful. However, they may be indicators worth examining, particularly if more than one applies:
- Your employer advertises for, recruits, or fills a substantially similar role shortly after your redundancy.
- Another employee has effectively taken over your former job. That said, distributing individual duties among remaining employees doesn’t necessarily mean the redundancy was not genuine; a genuine restructure can involve reallocating parts of a discontinued role.
- Your employer didn’t genuinely consult with you before making a final decision, but an applicable award or enterprise agreement required consultation.
- Reasonable redeployment options weren’t properly explored.
- The explanation given for the restructure changes over time, or conflicts with internal emails, organisational charts, business announcements, or other communications.
- The redundancy occurred shortly after you took parental leave, made a workplace complaint, raised a safety concern, requested an entitlement, or exercised another workplace right.
These factors should be assessed in the context of the whole situation. A redundancy may raise both genuine redundancy issues and separate concerns about prohibited adverse action or discrimination.
What can you do if you think your redundancy was not genuine?
If your dismissal doesn’t satisfy the genuine redundancy test, and you meet the relevant eligibility requirements, you may be able to make an unfair dismissal claim.
It’s important to act promptly. In most cases, you need to lodge an application with the Fair Work Commission within 21 days after the dismissal takes effect.
Depending on the facts, you may also need advice about a general protections claim, particularly if the redundancy followed the exercise of a workplace right, such as taking parental leave or making a complaint.
Discrimination issues may also arise if the decision was connected with a protected attribute. These are separate legal avenues and depend on the circumstances.
What evidence should you keep if you think your redundancy was not genuine?
Keep copies of documents and records that may help explain what happened, including:
- Your redundancy or termination letter
- Your employment contract
- Any applicable modern award or enterprise agreement
- Consultation emails, calendar invitations, and meeting notes
- Organisational charts from before and after the restructure
- Internal emails, announcements, or presentations about the restructure
- Advertisements for similar jobs
- Your former position description and any new or replacement position descriptions
- Records of vacancies, redeployment discussions, and roles you applied for or were offered
Keep dated copies of documents and make a contemporaneous note of relevant conversations, including who was present and what was said.
Employer requirements in genuine redundancy situations
As an employer, you have several responsibilities when it comes to genuine redundancy.
1. Give notice of termination of employment
If you or your company is in a situation where an employee is likely to be made redundant, you need to inform them of any changes that may affect them. You are also obliged to consult with the employee when it affects them.
Additionally, if termination of the employment contract is certain, you must provide written notice of the employee’s end of employment, in line with the Fair Work Act 2009 (Cth).
The minimum amounts of notice for employees are as follows:
| Employee’s Period of Service with Employer | Minimum Period of Time for Notice |
|---|---|
| Less than 1 year | 1 week |
| More than 1 year but less than 3 years | 2 weeks |
| More than 3 years but less than 5 years | 3 weeks |
| More than 5 years | 4 weeks |
2. Issue final pay
If an employee has been made redundant genuinely, you are still required to pay:
- Outstanding wages for the hours they have worked;
- Accumulated annual leave;
- Redundancy pay; and
- Annual leave loading or accrued leave, if applicable.
The Fair Work Ombudsman offer a Notice and Redundancy Calculator. This will allow you to easily calculate the amount of redundancy pay you are required to pay out where redundancy has been genuine.
Unsure how to manage a redundancy? Want to check whether your redundancy is genuine? A Lawpath employment lawyer can help you ensure compliance and protect your rights.
FAQs
Can my employer advertise my job after making me redundant?
Generally, no. It may signal that redundancy is not genuine. However, the role’s duties, scope, reporting line, and the employer’s operational reasons will matter.
Can my job be redundant if someone else does some of my duties?
Yes. A role can still be genuinely redundant where its duties are redistributed among other employees as part of a restructure.
What can I do if I think my redundancy was not genuine?
If you are eligible, you may be able to bring an unfair dismissal claim in the Fair Work Commission, generally within 21 days after your dismissal takes effect.
Does my employer have to offer me another role before making me redundant?
Not necessarily. That said, your employer must consider whether it would be reasonable to redeploy you within its business or an associated entity before finalising a redundancy.
