Reading time: 4 minutes

Redundancy is never an easy situation for employers. But it is something that happens more frequently than not, particularly in small businesses that may have frequent organisational changes for their employees or that need to operate flexibly according to client projects. Even businesses that are merged or taken over by other businesses may need to address redundancy issues when restructuring their workers. This shouldn’t be a reason for a business to only hire casual employees (workers who are usually not entitled to redundancy payments). In fact, having a good understanding of what redundancy is and your obligations is important for every employer that has employees or is planning to hire in the future. We revisit below what is a genuine redundancy as well as explain what an employer’s redeployment obligations are. 

1. What is Redundancy?

Redundancy occurs if an employee’s role within an organisation is no longer considered necessary for the ongoing operation of the business and the employer may terminate the employee’s employment. The employer must no longer require the employee’s position because of restructuring or operational changes that have arisen within the business. If redundancy occurs, the employer, usually by way of an employment agreement, an award, enterprise agreement or the National Employment Standards, is obliged to make a redundancy payment to the employee. 

2. But Was it Genuine?

Sounds simple, right? But, an employer needs to remember that the redundancy must be genuine, meaning you simply can’t use redundancy as a reason to remove an employee. Section 389(2) of the Fair Work Act 2009 (Cth) (‘Act’) states that a redundancy is not genuine if “it would have been reasonable in all the circumstances for the person to be redeployed within the employer’s enterprise or the enterprise of an associated entity of the employer”.

Although your business may be undertaking restructuring or organisational changes, you will need to consider other possibilities within the organisation or an associate of the organisation before officially making the employee redundant. 

3. What is the Standard in Seeking Redeployment?

The Act prescribes that an employer must comply with any employment agreements (or award or enterprise agreement) when it comes to consulting an employee about redundancy. Every employer should first consult with their employee and discuss the issue of redeployment.

In Henry John Howarth & Ors v The Ulan Coal Miners Limited [2010] FWA 4817 (Ulan coal Case No. 2), the Fair Work Commission (‘Commission’) was strict in their interpretation of the Act. Here the employers were a mining company who believed that they held little influence in the operations and management of their associated entities and thus did not attempt to redeploy their redundant employees to these entities. The Commission disagreed and stated that a more “activist” process for redeployment was required. The Commission went on to find that there was potential for a few of the employees to be redeployed.

4. What are the Consequences of a Non-Genuine Redundancy?

If a redundancy is not genuine or if an employee is under the impression that the redundancy is not genuine, they have the opportunity to make an unfair dismissal claim. Consequently, all employers should seek to make genuine redundancies by redeploying an employee within the organisation or an associated entity of the organisation if it is reasonable.

There are many steps an employer can take to minimise the risks of an employee making a successful unfair dismissal claim. This means taking the obligation to redeploy seriously and consulting with the employee about their prospects of gaining employment within the organisation or an associate of the organisation.

***

If you have any questions about redeploying your employees or your obligations as an employer regarding genuine redundancies, get in touch with our employment lawyers on 1300 544 755.

Webinars

Redundancies and Restructuring: Understanding Your Employer Obligations

Thursday 7 July | 11:00 - 11:45am

Online
If you plan on making a role redundant, it is crucial that you understand your employer obligations. Our free webinar will explain.
Register Now

How to Sponsor Foreign Workers For Your Tech Business

Wednesday 13 July | 11:00 - 11:45am

Online
Need web3 talent for your tech business? Consider sponsoring workers from overseas. Join our free webinar to learn more.
Register Now

Advertising 101: Social Media, Influencers and the Law

Thursday 21 July | 11:00 - 11:45am

Online
Learn how to promote your business on social media without breaking the law. Register for our free webinar today.
Register Now

Structuring for Certainty in Uncertain Times

Tuesday 26 July | 12:00 - 12:45pm

Online
Learn how to structure to weather storm and ensure you can take advantage of the “green shoots” opportunities arising on the other side of a recession.
Register Now

Playing for the Prize: How to Run Trade Promotions

Thursday 28 July | 11:00 - 11:45am

Online
Running a promotion with a prize? Your business has specific trade promotion obligations. Join our free webinar to learn more.
Register Now

Web3 Essentials: Understanding SAFT Agreements

Tuesday 2 August | 11:00 - 11:45am

Online
Learn how SAFT Agreements can help your Web3 business when raising capital. Register today for our free webinar.
Register Now

Understanding Your Annual Franchise Update Obligations

Wednesday 3 August | 11:00 - 11:45am

Online
Franchisors must meet annual reporting obligations each October. Understand your legal requirements by registering for our free webinar today.
Register Now

Legal Essentials for Product Manufacturers

Thursday 11 August | 11:00 - 11:45am

Online
As a product manufacturer, do you know your legal obligations if there is a product recall? Join our free webinar to learn more.
Register Now

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Need Legal Help? Submit an Enquiry

If you would like to get in touch with our team and learn more about how our membership can help your business, fill out the form below.

Our Awards

  • 2020 Innovation Award 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Award 2020 Employer of Choice Winner – Australasian Lawyer
  • 2020 Financial Times Award 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year Award 2021 Law Firm of the Year - Australasian Law Awards
  • 2022 Law Firm of the Year Winner 2022 Law Firm of the Year - Australasian Law Awards