In a world characterised by technological change and innovation, industries can change rapidly. In that context, employment is not, and never can be, certain. As a result, redundancy – including voluntary redundancy – becomes an increasingly common occurrence. And while it is never easy, having information about the nature of redundancy can help an employee to navigate their way through the practical aspects of the process. If you need information about voluntary redundancy, this article discusses what is voluntary redundancy, when it happens and a redundant employees’ entitlements.
What is Redundancy?
Redundancy occurs when an employer terminates a person’s employment because they no longer require anyone to do that job. Redundancy also happens when an employer becomes insolvent or bankrupt. Redundancy can occur for a variety of commercial reasons. When a business introduces new technology or machinery, some jobs previously done by people become obsolete. Similarly, a decline in economic growth can prompt a slowdown in a business’ demand making it necessary for them to make some employees redundant. Alternatively, they could move their operations interstate or overseas or need to restructure internally after a merger.
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 who is only one year from retirement. Alternatively, an employee looking to reskill and change career direction may feel that a voluntary redundancy would 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. Under the Fair Work Act 2009 (Cth), the employer follows all the prescribed consultation requirements set out in any relevant Award, Enterprise Agreement or Registered Agreement. When redundancy is genuine, an employee cannot make an unfair dismissal claim about their termination.
Redundancy can be not genuine in a variety of circumstances. These include when an employer hires another person to do the job that a redundant employee was doing previously. Similarly, redundancies are not genuine when an employer fails to follow all prescribed consultation requirements. Finally, redundancy will not be genuine if an employer could reasonably, in the circumstances, have given an employee an alternative job within the organisation.
In such cases, whether the redundancy is or is not genuine will depend largely on the particular circumstances and questions of reasonableness. In such situations, it is, therefore, more subjective and less straightforward to prove non-genuineness than if an employer hired someone else to do that job.
As outlined above, redundancy may not be genuine if an employer fails to follow all the necessary consultation processes prescribed in an award, enterprise agreement or registered agreement. Lack of consultation could potentially be costly for an employer because it makes them liable to claims for unfair dismissal. Consultation is not only necessary for redundancies. It is mandatory whenever management is undertaking any major changes to the workplace.
An employer has a particular time at which they must begin consultation. It must start as soon as possible after management has made the decision to effect significant workplace changes such as redundancies.
However, the consultation procedure is not merely a legal construct. Its overarching purpose is to ensure that employees are not left unaware or guessing in the face of significant workplace changes. Consultation is designed to foster a transparent and collegiate workplace as far as possible and reminds all parties that they have rights and responsibilities.
While precise details may differ between awards or agreements, in general, consultation includes:
- Notifying affected employees of management’s decision to undertake workplace change;
- Providing these employees with information about the changes and their likely impact;
- Inform these employees of the steps management will take to avoid or minimise the adverse effects of the changes; and
- Provide a forum or mechanism where employees can make suggestions or offer ideas about the changes that management considers.
Employees who choose voluntary redundancy are typically entitled to a redundancy pay. An employer calculates the amount based on an employees’ years of service. However, in some instances, the law does not require an employer to pay redundancy pay.
If you have been made redundant or have other specific questions and concerns about redundancy, speak with a lawyer experienced in employment matters. Their advice can help you to understand your legal rights. Contact LegalVision’s employment lawyers to assist you. Questions? Call us on 1300 544 755.