What is a "Genuine Redundancy" Situation?

Oct 29th, 2021

The concept of redundancy has been more and more relevant throughout the course of the COVID-19 pandemic, and more than ever employer’s are forced to consider whether or not it is appropriate for their situation. When examining this, it is important to determine whether or not a genuine redundancy situation exists, and how to act in response.

This article will examine what it means for a redundancy to be “genuine”.

The Fair Work Act 2009 (FWA) outlines that an employee’s termination would be considered a genuine redundancy if their job is no longer required to be performed by anyone at all as a result of changes to the operational requirements of the employer’s enterprise. If not, a retrenched employee can make an unfair dismissal claim. 

These changes in the operational requirements of a business can include:

  • A machine or technology replaces the job performed by an employee.
  • A downturn in the business, or in the economy generally the affecting the operational requirements.
  • Overstaffing – e.g. where the employer only needs three people to do a particular task or duty instead of five.
  • The employer restructures their business to improve efficiency.
  • Outsourcing particular tasks.
  • Relocation or sale of business.
  • No requirement for a permanent role as the role is now required on an ad-hoc basis (or vice-versa).
Establishing that a redundancy is “genuine” can prevent an employee from challenging the redundancy selection process as unjust and thus reduce the risk of an unfair dismissal claim. Of course, even if an employee does not yet have access to unfair dismissal, they can still nevertheless make a general protections claim if they believe adverse action has been taken against them for certain characteristics.

It is important to remember that a redundancy is primarily concerned as to whether the “job” itself exists, rather than the employee’s duties or to the quality that they perform them. The duties themselves can still remain if they are redistributed to another employee under a restructuring of the operations of the business.
Once the presence of a genuine redundancy has been established, the employer also has an obligation to engage in any consultation process that is required under a modern award or enterprise agreement.

This consultation process should be done as soon as possible, and include:
  • Notifying the employee/s who may be affected by the proposed change/s.
  • Providing the employee/s with information about these changes and their expected effects.
  • Discussing steps taken to avoid and minimise negative effects on the employee/s.
  • Considering employees ideas or suggestions about the changes.
In addition, an employers should consider any possible redeployment opportunities available to the employee, including the same position at reduced hours, and offer it if available.

A failure to engage in this consultation and offer of redeployment process can expose an employer to a breach of the employee’s award, or an unfair dismissal claim.

As such, when an employer needs to consider redundancy, they need to remember three key parts of the process: establishing that it is a genuine redundancy, engaging in consultation, and any potential redeployment opportunities.

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