In a world characterised by technological innovation, industries can change rapidly. Therefore, employment is not, and never can be, certain. As a result, redundancy – including voluntary redundancy – becomes an increasingly common occurrence. While it is never easy, having information about the nature of redundancy can help you, an employee, navigate your way through this process. This article explains:

  • what voluntary redundancy is;
  • when it happens; and 
  • your entitlements if you have been made redundant. 

What is Redundancy?

Redundancy occurs when an employer terminates someone’s employment because they no longer require anyone to do that job. It also happens when an employer becomes insolvent or bankrupt. Alternatively, the company could have moved their operations interstate or overseas and need to replace any employees who are not willing to move as well. 

Redundancy can occur for a variety of commercial reasons. When a business introduces new technology or machinery, some jobs previously completed by people become obsolete. Similarly, a decline in economic growth can prompt a slowdown in a business’ demand. This makes it necessary for them to make some employees redundant. 

What is Voluntary Redundancy?

Voluntary redundancy occurs when an employee volunteers or agrees to be made redundant. While such a decision may seem counter-intuitive, such employees often have very sound reasons why it is the right choice for them.

For example, an employee might be only one year from retirement.

Alternatively, an employee looking to reskill and change career direction may feel that a voluntary redundancy could give them the opportunity to do this.

What is Genuine Redundancy?

A genuine redundancy occurs when an employer no longer needs anyone to do the job previously performed by an employee. For it to be genuine, the employer must follow all the prescribed legal consultation requirements set out in any relevant:

When redundancy is genuine, you cannot make an unfair dismissal claim about your termination.

Redundancy can be not genuine in a variety of circumstances. These include when an employer hires another person to do the same job that you were doing previously. Similarly, redundancies are not genuine when an employer fails to follow all prescribed consultation requirements. Furthermore, if an employer could have given you an alternative job within the organisation, the redundancy will likely not be genuine. 

In such cases, whether the redundancy is genuine or not will depend largely on the particular circumstances. It is, therefore, very subjective and less straightforward to prove non-genuineness when an employer has hired someone else to do your job. 

Consultation Requirements

As outlined above, redundancy may not be genuine if an employer fails to follow all the necessary consultation processes prescribed in:

  • awards;
  • enterprise agreements; or
  • registered agreements.

Lack of consultation could potentially be costly for an employer because it makes them legally responsible for claims for unfair dismissal. However, consultation is not only necessary for redundancies. It is also mandatory whenever management is undertaking any major changes to the workplace.

An employer must begin consultation as soon as management has made the decision to effect significant workplace changes, including redundancies.

However, the consultation procedure is not merely a legal construct. Its overarching purpose is to ensure that you are not left unaware in the face of significant workplace changes. Consultation is designed to foster a transparent and collegiate workplace and remind all parties that they have rights and responsibilities.

While precise details may differ between awards or agreements, in general, consultation requires that employers:

  • notify you of management’s decision to undertake workplace change;
  • provide you with information about the changes and their likely impact;
  • inform you of the steps that management will take to avoid the adverse effects of the changes; and
  • provide a forum where you can make suggestions about the changes that management considers.

Entitlements

If you choose voluntary redundancy, you are typically entitled to redundancy pay. An employer calculates the amount based on your years of service to the company.

However, in some instances, the law does not require an employer to pay redundancy pay. This may be when you have been working for a company for under a year. 

Key Takeaways

If you have been redundant or believe that you may be about to be made redundant, it is important to be aware of your rights and responsibilities. You should make sure that the redundancy is genuine and that your employer has met all conditions. If not, you may be able to make a claim for unfair dismissal. If you have any questions about redundancy and voluntary redundancy, contact LegalVision’s employment lawyers on 1300 544 755 or fill out the form on this page.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.
Carole Hemingway

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