If you are thinking about making employees redundant, you should seriously consider holding redundancy consultations. Holding a redundancy consultation is a precautionary measure you should take to ensure that you are not subject to unfair dismissal claims under Australian law. In addition, the law requires employers to follow any consultation requirements specified in modern awards and enterprise agreements when making employees redundant. If an employer does not follow these requirements, an employee could have a successful unfair dismissal claim as the termination will not be a genuine redundancy. This article provides an outline of seven practical steps you can take to formally conduct a redundancy consultation and also remain compliant under Australian law.
1. Consult With All Staff
The first step in the redundancy consultation process is to announce any operational changes. These can be made verbally, or in writing. You should inform your staff that you will be meeting with them individually to discuss the situation. This announcement should address:
- that you will be making redundancies;
- the main reasons for the redundancy; and
- any redeployment opportunities.
2. Confirm Redundancy and Alternative Positions
After confirming all redundant roles, you should then confirm your employees’ notice period and entitlements. This confirmation should include whether your employees will receive redundancy pay. Whether you need to pay redundancy pay depends on your obligations under your modern employment award and National Employment Standards.
Redundancies will not be genuine unless you have considered redeployment options within your business or its entities. As such, you should investigate whether there are any alternative roles for your employees based on their skills and expertise.
3. Draft Termination and Redeployment Letters
When drafting your termination letters, you should consider whether you are making the role redundant or whether you are offering a new role within the business. Depending on the situation, you will need to draft a different letter.
Termination letters are applicable when you are making the role redundant and should cover:
- the reasons for redundancy;
- your attempts to find a new role;
any final pay and redundancy pay if relevant; and
- your employee’s notice period and last day of work.
However, if you are offering the employee a new role within the business, you should draft a redeployment letter which covers:
- the details of the new role;
- the offer to take up the new role;
- final pay; and
- notice concerning the redundant role.
4. Arrange Individual Consultations with Employees
The next step is to arrange the redundancy consultations. You should organise a time for individual consultations with each employee and do so before providing the employees with the termination or redeployment letters.
The consultation must not be a mere formality as it provides an important opportunity for the employee to express their views and to ask questions. It also provides an opportunity to ensure there is a fair and amicable ending to the employment arrangement.
5. Undertake the Consultation
Your consultations with employees should be similar, regardless of whether they are being redeployed or made redundant. During the consultations, you should:
- provide background on the decision to make their role redundant;
- give the employee the opportunity to ask questions about the decision;
- explain the information in the termination letter; and
- if you are providing them with a redeployment option, discuss this option with the employee and give them reasonable time to get back to you.
6. Provide the Employee With Appropriate Final Letter
Based on whether the employee will be made redundant or redeployed, you should provide the employee with the:
- termination letter which sets out their final pay and notice period; or
- redeployment letter, which sets out the new offer of employment and provides the employee with a contract of employment.
7. Pay Final Pay
For the employees you are making redundant, you will need to satisfy your obligations under your modern award and the National Employment Standards. In particular, you will need to provide the employee with their final pay and redundancy pay if required.
If you are looking to make employees redundant, it is a good idea to hold redundancy consultations to ensure the redundancy is genuine. This is to protect yourself from potential unfair dismissal claims that employees could be successful if the redundancy is not valid. You should ensure that you communicate clearly with your employees and give them a chance to express their views. Also be aware of your obligations under the relevant modern employment award and the National Employment Standards, including paying final pay and whether you need to pay redundancy pay. If you have questions about making employees redundant, get in touch with LegalVision’s employment lawyers on 1300 544 755 or fill out the form on this page.
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