Redundancy & COVID-19
By Lucy Carroll
The current pandemic is having a significant impact on the Australian economy, as governments force businesses to close, having a dramatic flow-on effect for employees. If your workplace is facing the impacts of COVID-19, it is important to consider whether your employer has complied with its obligations under the Fair Work Act 2009 (Cth) (the Act), particularly if they are trying to make your position redundant.
Marrickville Legal Centre has extensive experience in assisting employees with the redundancy process, and any necessary applications that need to be brought against the employer with the Fair Work Commission, for failure to comply with its obligations under the Act.
Was it genuine?
Genuine redundancy is defined in section 389 of the Act. This section provides a jurisdictional objection to an unfair dismissal. However, it is also a useful guide for employees to ensure that any termination of employment is implemented lawfully.
There are three limbs to a genuine redundancy:
- The employer no longer requires the person’s job to be performed by any person because of changes in the operational requirements of the employer’s enterprise;
- The employer complies with any obligation in a Modern Award or Enterprise Agreement that applies, to consult about the major workplace change and redundancy;
- Within the employer’s enterprise (or the enterprise of an associated employer), there was no role into which it would have been reasonable in all the circumstances for the person to be redeployed.
Does your position still exist?
The accepted definition of ‘job’ is “a collection of functions, duties and responsibilities entrusted, as part of the scheme of the employer’s organisation, to a particular employee”.
Your employer cannot select you, as an employee, to make you redundant. Instead, your employer must identify certain positions that are no longer required due to changes in the operational requirements of the business. There is a distinct difference between the job and the ‘functions’ or ‘duties’ which is that a genuine redundancy can still occur where the duties of a previous job continue to need to be performed but are redistributed to other positions/jobs or are outsourced to independent contractors.
What constitutes changes in operational requirements?
Although the Act does not define ‘operational requirements’, a dismissal will be held to be based on changes in operational requirements “if the action of the employer is necessary to advance the undertaking and is consistent with management of the undertaking that meets the employer’s obligations to employees”.
Operational requirements, therefore, permits consideration of:
- Past and present performance of the business;
- The state of the market in which the business operates;
- Steps that may be taken to improve the efficiency of the business by installing new processes, equipment or skills, by arranging for labour to be used more efficiently; and
- The application of good management to the business.
When multiple employees perform the same job
During and subsequent to changes in the operational requirements of a business, you may find yourself in a team where you and your co-workers perform the same role. In these circumstances, it can be difficult to navigate how your role may be selected instead of another co-workers role.
Provided that the reason for your termination is that the role is no longer required because of changes in operational requirements, an employer can apply their own selection criteria, including performance criteria, to assess which employee is to be made redundant.
However, as with any other dismissal, employers must continue to ensure prohibited criteria – that could give rise to a general protections or discrimination claim, are not utilised in the redundancy selection process.
Employers are required to consult with employees covered by a Modern Award or Enterprise Agreement that provides for consultation, about a proposed restructure as soon as possible in the decision-making process, or more specifically, as soon as a decision to consider a restructure and the possibility of redundancies has been made.
The purpose of consultation is to assist management by giving it access to ideas or options that they may not have otherwise considered, as well as to provide the potentially impacted employees with an opportunity to reduce the impact of any negative effects likely to come about as the result of a proposed restructure.
Typical steps you should expect from your employer are:
- Explain the situation that has made the restructure necessary, in writing;
- Provide an outline or framework of the proposed restructure, in writing;
- Ask for input from the potentially impacted employees, carefully considering any responses;
- Make a final decision; and
- Implement the decision.
A dismissal will not qualify as a ‘genuine redundancy’ if it would have been reasonable to redeploy an employee, i.e place the employee in another role within the employer’s business, or the business of an associated entity of the employer.
In determining whether or not there is a reasonable redeployment opportunity – the following factors should be considered:
- Is there actually a position available?
- What skills, qualification and experience are required for the position being offered?
- Does the relevant employee have the skills, qualifications and experience required for the position being offered?
- What is the location and remuneration of the job being offered?
- How do the location and remuneration of the job being offered compare to the location and remuneration of the employee’s current role?
Even if a position is at a lower level than the original position held by an employee, your employer is still required to offer this to you for consideration, the employer cannot assume that you would not take the position.
If your employer has complied with all the requirements above, you must ensure that any redundancy calculation consists of:
- Redundancy pay; and
- Accrued annual leave
As a starting point, you should check the National Employment Standards in order to calculate the amount of notice and redundancy pay you are entitled to, although this amount may vary depending on your employment contract or any relevant enterprise agreement, for a greater or specific amount to be paid.
A crucial point to remember is that if your employer is a Small Business Employer, with less than 15 employees, it is exempt from having to pay the ‘redundancy pay’ component.
If you are redeployed into another position, your employer may apply to the Fair Work Commission to have any redundancy pay varied to a lower amount, or in some instances, nil.
 Jones v Department of Energy and Minerals (1995) 60 IR 304, 308 (Ryan J).
 Nettlefold v Kym Smoker Pty Ltd (1996) 69 IR 370, 373 (Lee J).
 UES (Int’l) Pty Ltd v Leevan Harvey  FWAFB 5241.