Here are five legal tips to keep in mind when your organisation is considering redundancies.
After months of agonising, you make a tough decision and propose redundancies. Now you need to think about implementation. Which positions should go? How am I going to break the news? Also, how can I do all this to make sure redundant employees don’t bring an unfair dismissal claim?
1. Redeployment – assume nothing
Many employers make assumptions about an employee’s willingness or ability to undertake a vacancy within the business. An employer may assume the job is too junior, pays too little, or the employee does not have the requisite qualifications and experience etc. So a vacancy is neither offered nor discussed with the employee.
Jenny Craig Weight Loss Centres Pty Ltd v Margolina is a valuable lesson about why you shouldn’t make assumptions like this. The employer failed to offer a Regional Manager earning about $102,000 per year a redeployment opportunity paying around $38,000 per year because they figured it would have been seen as insulting.
The employee disagreed and claimed unfair dismissal. She argued, and the Commission agreed, that lower paying jobs should have been offered to her. She gave evidence that the reduced working hours of these jobs would have suited her because, “At that time in my life I would be happy to even do a part-time job with the company because my daughter did not know I’m her mother”.
2. Understand the ‘consultation’ obligations
For instance, the model Modern Award consultation term regarding major workplace change doesn’t require employers to provide their staff with an opportunity to change a definite decision regarding redundancies. This is because there is (despite the name) there is no obligation to consult with employees about the changes, only an obligation to discuss them (this must happen before the change is implemented).
However, if an Enterprise Agreement includes an obligation to consult about changes, then an opportunity to persuade the employer to revoke or modify its proposed decision should be provided.
Additionally, the Fair Work Act includes further consultation obligations which sometimes apply. Employers proposing to make 15 or more employees redundant will need to consult with unions if one or more employees are union members and the contacted unions are entitled to represent employees’ industrial interests.
The Fair Work Act includes further obligations to notify Centrelink where there are 15 or more redundancies.
3. Check your selection criteria doesn’t indirectly discriminate
Employers should check that the selection criteria for deciding who would be made redundant does not indirectly discriminate. The classic example here is making all part-time or casual employees redundant in the first round of redundancies. Sometimes the demographics of a workforce can be such that a higher proportion of part-time and casual employees are female (whereas a higher percentage of males work full-time).
(Read our article on how sometimes pregnant women are unfairly targeted for redundancies.)
4. Support, support, support
Not all employees will react the same way to the news of redundancy. Some may be thrilled at the prospect, others may be worried about supporting their families and meeting financial commitments. Some employees may just want to be left alone.
The best strategy is to be as flexible and supportive as possible. This may include allowing employees time off work to attend interviews. It may also include supporting employees via assistance programs and outplacement services.
Anecdotally, employees who feel supported during the redundancy process are more likely to advocate your brand. They may also be less inclined to litigate.
5. Get help early
If you feel you’re out of your depth, it’s a good sign that you probably are. There are so many potential pitfalls with redundancy. And there is a significant body of case law about them. It’s best to get good advice early. It could save your business much heartache and expense later.
Enjoy the peace of mind that AHRI ProCover professional indemnity insurance brings, by becoming an AHRI member.
By Adam Colquhoun, Westmore Jacobs Workplace Law