A guide to Redundancy

I have decided to share this article as the current environment in Australia means that many businesses are considering making people redundant right now. This is the first in our series of articles looking at how businesses can legally, and responsibly, navigate the minefield of redundancy. We know there’s a lot to cover here – that’s why we’ll be talking about it over a three-part blog series. You can access the second and third blogs via my website.

We’re going to take you through the obligations of business owners and leaders when determining a genuine redundancy, things to consider when communicating the redundancy, and dealing with the fallout of both the affected individuals as well as the wider business.

First, let’s be clear about one thing – businesses make ROLES redundant, not PEOPLE. And businesses make roles redundant for all sorts of reasons. The organisation might be experiencing financial downturn (this is probably what is front of mind right now), and be looking to reduce costs as a result. Changes to workloads, perhaps in the form of a decreased client base, may mean that a reduced number of employees are required. Or even with rapid improvements in systems and technologies being introduced, certain processes may be implemented that streamline productivity and replace the need for a particular role.

Whatever the circumstances are leading up to the redundancy decision, before you make a role redundant it is extremely important to assess whether the redundancy is a genuine redundancy and therefore lawful. In considering whether a redundancy is genuine, you must meet the following criteria:

• That the role in its current form is no longer required to be worked by any one person in the business;
• That you have looked at all options to reasonably redeploy the person within your business – this must take into consideration their skills and experience; and
• That you have met all contractual and consultation obligations in the contract of employment, National Employment Standards and any Award or Enterprise Agreement that the person is covered by.

When considering cases where employees have challenged the legality of their redundancy, Fair Work Australia tends to look closely at whether businesses have fulfilled these obligations; but they won’t just take your word for it. It is critical that documentation and other evidence can be provided to show that as an employer you have taken steps to ensure that there is no other option other than the redundancy, and all other avenues have been given adequate consideration. This may take the form of a business case document, a presentation and approval process to your board a meeting agenda and minutes etc.

We recently received the following question from one of our clients:

‘I have an employee who isn’t performing and I don’t have time for a performance management process. Can I just make them redundant?’

We get this question a lot, and we often see businesses attempting to shortcut (or what they think is a shortcut) by taking this route. We definitely wouldn’t recommend this course of action, and not just because it’s unlawful. Being a leader is never easy, but as a business owner this is exactly your job; to coach, support, and train your staff to be the best performers possible. If an individual’s work is not up to standard then they should be engaged in a formal performance management process. Getting rid of them by disguising it as a redundancy is just, well, dodgy. It is also bad for business, and bad for your brand.

So in summary:

• You MUST assess your redundancy decision against the three criteria outlined above, and the process for doing this needs be robust and transparent;
• You CAN make roles redundant if a change in operational needs means that the role is no longer required either in its current form or at all. Working out if a changed role is a genuine redundancy or not can be tricky, so we recommend getting advice on where this happens. WE CAN HELP YOU!
• You CAN’T use the redundancy as an excuse to terminate someone who is under-performing, or because you just don’t like them.
• You need to follow a proper consultation process.

In our next blog – Part two we look at how to communicate the redundancy and main factors to consider in your communication strategy.

You can check it out here.

Written by Emily Jaksch

Founder of HR Gurus

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