As your enterprise grows, you are likely to automate systems and processes. From developments in technology to company restructuring, you may no longer require some of the roles your employees perform. It’s then critical that your enterprise identifies whether you are removing the position or dismissing the employee. We set out below what is a genuine redundancy and how you can protect your enterprise from an unfair dismissal claim.

What is a Genuine Redundancy?

If you don’t intend to hire someone else to replace the employee, and you cannot move them to another position within your enterprise, you will likely need to make the employee redundant. Ensure that you understand the protections the Fair Work Act 2009 offers your staff including the avenue to claim for unfair dismissal or unlawful termination if it is not a genuine redundancy.

How Can I Protect my Enterprise?

Firstly, are you simply trying to rid your business of a poor performing or troublesome employee under the false pretence of redundancy? Unfortunately, this is relatively common, and the Fair Work Commission does not look favourably on employers trying to skirt around by changing the job title or making minor alterations to the job description. You will also need to confirm that there are no other suitable positions or teams at your company that your employee can move into.

If you hire staff subject to an Award, for example, administrative staff, you need to discuss the planned redundancy with them. You should make sure you explain the decision, the consequences and what you’re doing to minimise the harm they will suffer due to the redundancy. Again, you’ll also need to consider whether you can move these staff into a new position or team. If you are unable to do, you must pay out the employee in compliance with the terms of the highest paying agreement they are subject to. This could be their Award Rate, your internal policy, an Enterprise Bargaining Agreement, or their Employment Agreement.

How Much Will I Need to Pay?

As you employ more than 15 people, it is highly likely that you’ll be required to payout your employees on a sliding scale that increases with the employee’s age and time at your enterprise. This starts from four weeks pay after one year with your company.

Key Takeaways

If your business’ needs have changed and you no longer require a staff member to fulfil a particular role, you can make the position genuinely redundant. As the operator of an enterprise, you should ensure that the termination of employment is for a genuine redundancy and that your business no longer requires the position to be fulfilled, rather than no longer wanting the staff member. If you’re looking to remove a particular employee due to poor performance or because they’re not the right fit for your workplace then this is unlikely to qualify as a genuine redundancy, and you should consider whether there are reasonable grounds for termination. Questions? Get in touch with our employment lawyers on 1300 544 755.

Thomas Richman
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