Redundancy Process

Redundancy is a term used when an employer terminates an employee's employment due to a genuine operational need, such as a company restructuring or downsizing. Making an employee redundant can be a challenging and sensitive process for both the employer and the employee. In this blog post, we will discuss the process an employer needs to take.

Step 1: Determine genuine redundancy

The first step for an employer is to determine whether the redundancy is genuine. A genuine redundancy occurs when an employer no longer requires an employee's job to be performed by anyone due to changes in the operational requirements of the business. The Fair Work Act 2009 provides a framework for determining whether a redundancy is genuine or not. Employers must demonstrate that:

• They no longer require the employee's job to be performed by anyone due to changes in the operational requirements of the business.
• The employer has complied with any consultation obligations under a modern award or enterprise agreement.

Step 2: Consultation

Employers have an obligation to consult with affected employees when considering redundancies. This consultation process is to allow the employees to provide feedback on the proposed redundancy and explore alternatives to redundancy. Consultation is a crucial step in the redundancy process as it can help reduce the impact on affected employees and mitigate the risk of unfair dismissal claims.

The consultation process should be conducted in good faith, and the employer must provide information about the proposed redundancy.

Steps and important factors to consider in the Consultation process:

1. Modern Awards or Enterprise Agreements: Employers must consult with employees in accordance with any consultation provisions in the relevant Modern Award or Enterprise Agreement that applies to their business.
2. Information to be provided: Employers must provide information to affected employees about the proposed redundancy.
3. Timing of Consultation: Consultation must occur as soon as practicable after the employer has made the decision to consider redundancies, but before any final decision is made.
4. Consultation Process: Employers must consult with affected employees in good faith. This means that employers must genuinely consider the views of employees and their representatives and provide feedback on any alternatives proposed.
5. Employee Representatives: Employers must allow affected employees to appoint a representative to participate in the consultation process.
6. Record-Keeping: Employers must keep a written record of the consultation process, including any feedback from employees and their representatives.
7. Compliance: Employers must comply with any consultation obligations set out in the relevant Modern Award or Enterprise Agreement, as well as any consultation requirements in the Fair Work Act 2009.

Step 3: Notice of redundancy

The employer must provide written notice to the affected employees of the redundancy. The notice should include the reason for the redundancy, the last day of work, any entitlements, and any alternative employment opportunities within the organisation. The notice period should be in accordance with any relevant modern award, enterprise agreement or the National Employment Standards (NES). Employers should also provide support and assistance to affected employees during this difficult period.

Step 4: Redundancy pay and entitlements

Employees who are made redundant are entitled to redundancy pay under the NES, modern award or enterprise agreement. The amount of redundancy pay depends on the length of service and the employer's size. Employers must ensure they pay the correct amount of redundancy pay and any other entitlements, such as annual leave and long service leave.

Making an employee redundant is a complex process that requires employers to follow specific steps to ensure a fair and legal process. Employers must consult with employees, provide notice and support, and pay redundancy entitlements. It is crucial for employers to understand their obligations and responsibilities when considering redundancies to avoid legal claims and maintain a positive workplace culture.

‍

If you need any advice and need help, please reach out at hello@hrdynamics.com.au or 1800 877 747