Genuine Redundancy

There are difficult times ahead for the economy and employees are faced with the possibility of making employees redundant.

How do you achieve this whilst still protecting yourself from a claim for unfair dismissal?

If you are an employee what are your rights when it comes to being made redundant?


When does Unfair Dismissal arise?

We consider Section 385 of the Fair Work Act 2009 (Qld) (“the Act”) that provides that unfair dismissal arises when:

(a)       a person has been dismissed; and

(b)       the dismissal was harsh, unjust or unreasonable; and

(c)       the dismissal was not consistent with the Small Business Fair Dismissal Code; and

(d)       the dismissal was not a case of genuine redundancy.


Do Employers have a defence against a claim of Unfair Dismissal?

In the event of unfair dismissal, employers may have a defence if a person’s dismissal amounts to genuine redundancy. Section 389 of the Act provides that it will be a genuine redundancy if the employer can prove that:

(a) the person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise;

(b) the employer has complied with any obligation in a modern aware or enterprise agreement that applied to the employment to consult about the redundancy.”

Further, the employer must prove that it was not reasonable in the circumstances for the person to be redeployed.


What is a genuine redundancy?

A dismissal is a case of genuine redundancy if the employer no longer required the job to be performed by anyone because of changes in the operational requirements of the enterprise.

If this happens, the Employer must consider re-deployment options and comply with any obligation in a modern award or enterprise agreement to consult about the redundancy.

It is very important that an employer carefully considers these obligations, as a failure to comply can mean that it is not a genuine redundancy and recourse to unfair dismissal may be available.


What are the consultation obligations?

As an employer there are consulting obligations that you must comply with in a relevant Modern Award or Enterprise Agreement.  Consultation obligations can include:

    • notifying the affected employees and their representatives (if any) when a definite decision has been made;
    • discussing the decision with the employees and their representatives (if any) as early as practicable after the decision has been made;
    • providing all relevant information (in writing) about the changes to the affected employees (including nature of the changes proposed, expected effects of the changes on the employees, and measures to avert or mitigate the adverse effects); and
    • giving prompt consideration to matters raised by the employees relating to the change.

If in the case that an employer fails to comply with the consultation obligation, this may result in an unfair dismissal as the employer will not have a defence of genuine redundancy. If this happens, the employer will then need to demonstrate that, not withstanding this failure, the dismissal is still “fair”.

In Harrison v Queensland University of Technology [2010] FWA 8789, the employee’s dismissal was held not to be a genuine redundancy despite the fact that the employee’s position was no longer required. This was because QUT had failed to take several vital steps in the redundancy process. For example, the employer did not discuss or consult with the employee any possibility of redeployment before the decision to terminate the employment was made.


Is it reasonable for a person to be redeployed?

Being redeployed depends on whether the redeployment is within the employer’s enterprise or the enterprise of an associated entity of the employer and is reasonable in the circumstances.

In this case, the dismissal will not amount to a genuine redundancy and the employer may not have a defence to a claim of unfair dismissal.  However, if such redeployment is not reasonable in all the circumstances, the employer may rely on the defence of genuine redundancy.

Again, in Harrison v Queensland University of Technology [2010] FWA 8789, an offer of redeployment was provided to the employee by letter.

However, there was no consultation or discussion with the employee about redeployment, before the decision to terminate the employee’s employment was made. There needed to be a real consideration of options for redeployment.

In another case, the Full Bench of Fair Work Australia in Ulan Coal Mines Ltd v Honeysett & Others [2010] FWAFB 7578 held that “it is an essential part of the concept of redeployment…that a redundant employee be placed in another job in the employer’s enterprise as an alternative to termination of employment”.

The Full Bench found that the following factors are relevant when considering whether it is reasonable for a person to be redeployed:

    • the job must be suitable (that is, the employee should have the skills and competence to perform it);
    • the location of the job in relation to the employee’s residence; and
    • the remuneration which is offered.

In the situation of redeployment, an employer would have to consider all the factors involved. If the employer decides that it would not be reasonable for the person to be redeployed, then it may rely on the defence of genuine redundancy if a claim of unfair dismissal is made against it.


Do you have questions regarding a redundancy defence?

As an employer, making a decision regarding redundancy may need the recommendation of legal experts. We would recommend that you seek legal advice prior to making any decision to ensure that you meet all the requirements in the Act..  We can assist you with this.

As an employee who has been dismissed on the basis on redundancy and you want to know if it might amount to unfair dismissal, early legal advice is essential as you only have 14 days from the date the dismissal takes effect to bring an application for unfair dismissal.  We can assist you with this. Contact us today!