Woolworths has recently announced that it will be closing 60 Masters stores across Australia because of the hardware chain’s heavy financial losses. As a result, 10,000 Master’s employees are facing redundancies of their employment in the coming months.
During our working lives, it is likely that many of us will face the possibility of a redundancy of our employment because of factors like:
- economic downturn;
- restructuring of a business; and
- technological / market changes.
A redundancy can be very stressful for employees and employers but there are ways that both parties can best manage a redundancy situation.
What is redundancy?
Redundancy is when an employee is dismissed from their employment because the employer no longer requires the employer’s role to be performed by anyone. As per the Fair Work Act 2009 (Cth) (FWA) a ‘genuine redundancy’ occurs when:
- the employer no longer requires the employee’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and
- the employer has complied with any consultation obligation in a modern award or enterprise agreement that applies to the employment.
In a redundancy situation, the role, not the employee, is made redundant. A redundancy can happen even if the work of the dismissed employee is still being done by other employees – as long as the role of the dismissed employee no longer exists.
Pursuant to the FWA, an employee’s dismissal is ‘not a case of genuine redundancy’ if it would have been reasonable in all the circumstances for the employee to be redeployed within:
- the employer’s enterprise; or
- the enterprise of an associated entity of the employer.
What are the impacts of redundancy?
Redundancies can be traumatic for employees and can lead to them being less trusting of people in general. This trauma and distrust can last for years after a redundancy situation.
A redundancy can also be very costly for employers. In the Masters situation for example, Woolworths may be left with a large bill for redundancy pay-outs for eligible Masters employees. Eligibility will be based on applicable statutory, award, agreement, contractual and policy provisions.
How can employers best manage a redundancy, from a legal point of view?
There are a number of legal steps that an employer can take to best manage a redundancy situation. These include, but are not limited to:
- making sure the redundancy is a ‘genuine redundancy’, so there is less likelihood of an employer being exposed to a legal claim by an employee;
- carefully considering employees for retrenchment by checking any applicable award, enterprise agreement, and anti-discrimination obligations;
- if an employer decides to retrench 15 or more employees, it must give written notice about the proposed retrenchments to:
- Centrelink; and
- each employee union.
- providing retrenched employees with the correct notice and amount of redundancy pay.
Any redundancy should be carefully thought out by the employer. There are many legal considerations to take into account during each step of the process.
Conclusion
Even though a redundancy can be stressful and costly, there are a number of actions an employer can take to best manage the situation. These steps will reduce an employer’s exposure to employee claims and liability for breaches of the FWA.
How can we help you to best manage a redundancy situation?
If you are an employer who is considering / in the process of restructuring, or you are an employee who is affected by a redundancy situation, please feel free to contact our office to arrange a private consultation with our experienced employment team.
About the authors:
This article has been co-authored by Shzan Plandowski, law graduate and Jacqueline Brown, director at Lynn & Brown Lawyers. Shzan has experience in corporate and property law. Jacqui has over 20 years’ experience in legal practice and practices in family law, mediation and estate planning. Jacqui is also a Nationally Accredited Mediator and a Notary Public.
