Considering who should be made redundant and why

By July, 2016 April 13th, 2017 Exclusives, Legal

The often complex and difficult process of implementing redundancies can put significant financial and personal stress on both employers and employees. In this, the second of our three part series on redundancies, we outline the key considerations for effectively implementing genuine workplace redundancies.

Once the decision to begin the redundancy process has been made, and employees have been consulted about proposed workplace changes, it is necessary to select who will be made redundant, establish why they will be made redundant, and to set out how to proceed with the redundancy implementation.

When selecting which employee(s) should be made redundant the following considerations are important:

1.    Remember that redundancy refers to a position or role being made redundant, not a person. This can result in the loss of valuable skills, experience and knowledge as well as costly redundancy payouts. Options such as redeployment or retraining might be considered to ameliorate financial and personal costs for both employees and employers.

2.    Consider employee responses to initial redundancy consultations. Early retirement, taking accrued holiday leave, or voluntary redundancy should be thoroughly discussed and explored together with redundant employees.

When considering why employee(s) should be made redundant the following should be addressed:

1.    Demonstrate solid and reasonable reasons for redundancies. Retrenchment can be a time of significant personal uncertainty – explaining to affected employees that they will be made redundant due to cost cutting measures or functional efficiency improvements for example, can relieve feelings of personal accountability.

2.    A common and often costly legal mistake employers make is assuming that poorest performers are first to go. This is not necessarily the case when implementing redundancies and may result in successful unfair dismissal claims. Redundancy should not depend on performance – it is not the employee but the position which is redundant.

When considering how employee(s) should be made redundant the following should be addressed:

1.    Consulting with employees at all stages of the redundancy process is crucial, and is often made a mandatory obligation in modern Awards and Enterprise Agreements. Ensuring that each affected employee is adequately consulted, informed and heard at each stage of the process can help ease a stressful situation for all parties.

2.    Follow correct legal procedures. Strategies such as giving redundant employees the correct amount of notice, communicating with them openly and reasonably, and providing them with a timeline of events that outline how the redundancy implementation will affect them, can help avoid future potential litigation and financial penalties.

3.    Options for redeployment. Redeployment can be a complex and difficult process. Employers must consider a number of factors when considering redeployment, including:

▪    Is the redundant employee able to perform an available alternative position? Do they require further training?

▪    Does the redundant employee want to be redeployed? Factors such as longer travel times to work, lower remuneration or status, or fewer working hours might affect an employee’s willingness to be redeployed. It should not, however, be assumed that an employee will not accept such conditions

▪    Is there a definite job available to the redundant employee? Asking redundant employees to apply and compete for a position does not qualify as redeployment.

When considering redundancies in the workplace, employers should remember that the nature of a business will determine how a redundancy is decided, how it is discussed with employees, and how it will be implemented. It is always recommended that employers consult legal practitioners before making any concrete decisions to help minimise workplace disruption and potential future legal action.

Shane Wescott is an experienced employment lawyer and principal solicitor of Patron Legal. He is currently a member of the NSW Law Society’s Employment Law Committee and has a passion for pro bono legal assistance.

Patron Legal is a national workplace relations law firm with offices in Sydney and Melbourne. The firm only employs senior legal practitioners who come to the law with practical ‘real world’ experience in other industries. Patron Legal prides itself on being able to provide flexible, practical and cost-effective workplace relations solutions for organisations of all sizes.

Read more in this Legal Series by visiting our profile

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