Redundancy consultation is a precautionary measure you should take to ensure that you are not subject to unfair dismissal claims under the Fair Work Act 2009 (Cth) (FWA). The FWA specifically mentions redundancy consultation in section 389(1)(b). It requires employers to follow any consultation requirements specified in modern awards and enterprise agreements when making employees redundant. If an employer has not followed these requirements, the employee will have ground to make an 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 to remain compliant under the FWA.
1. Consult With All Staff
The first step in the redundancy consultation process is to make an announcement in regards to operational changes that are happening (verbally is usually acceptable). You should inform staff that you will be meeting with them individually to discuss the situation. This announcement should address:
- The major reasons for the redundancy;
- That you will be making redundancies; and
- Providing redeployment where possible.
2. Confirm Redundancy and Alternative Positions
After confirming that each role is genuinely redundant, you should confirm the employee’s notice period and entitlements. This confirmation should include whether you are obliged to pay redundancy pay.
Redundancies will not be genuine unless you have considered redeployment options within your business or its entities. As such, you should then 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.
If you are offering the employee a new role within the business, you should draft a redeployment letter which covers:
- Details of the new role;
- The offer to take up the new role; and
- 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 is an opportunity for the employee to provide their views and to ask questions. It is critical to ensure there is a fair and amicable ending to the employment arrangement and so that the employee can provide their input.
5. Undertake the Consultation
The consultations with the employees should be similar regardless of whether they are being made redundant or redeployed. During the consultations, you should:
- Provide background on the decision to make their role redundant (e.g. changes to the market, business structure, projects, product lines, etc.);
- Give the employee the opportunity to ask questions about the decision;
- Run through the information in the termination letter; or
- If you are providing them with the option of a redeployment, you can then 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
- Provide the employee with the redeployment letter which sets out the new offer of employment and then provides the employee with a contract of employment.
7. Pay Final Pay
For the employees that you will make redundant, you will need to satisfy your obligations under the National Employment Standards. In particular, you will need to provide the employee with their final pay and redundancy pay if required.
Are you going through structural changes where you need to make employees redundant? If you need help with your redundancy consultations or drafting letters or contracts, get in touch with our employment lawyers on 1300 544 755.
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