Redundancy – Not a Straightforward Process

With higher costs affecting many farms the cost of labour is often brought to mind, and decisions are made that fewer staff are required.

When an employer makes a decision to reduce staff it is the case that the employee’s position is made redundant. That is, the employer no longer requires the role performed by anyone.

However, an employee who is dismissed as a result of their position being made redundant can make a claim for unfair dismissal. It is then up to the employer to prove that it was a genuine redundancy, not just an excuse to get rid of a difficult employee. TO do so the employer must be able to show that they have met the consultation obligations under the award and have reasonably considered redeployment of the employee, that is, looked to see if the employee could fill another position within the business.

The fact that only one position is being made redundant does not exempt an employer from its consultation obligations because the decision to make a single position redundant in a small business is likely to affect remaining employees, particularly if the work undertaken by a person in that position will be redistributed among remaining employees.

In a recent case before the Fair Work Commission the redundancy arose when the employer determined that one of three employees in similar roles had to be made redundant due to a downturn in business. The employer selected the role occupied by the poorest performer for redundancy. The Commission observed that it would have required little, if any, effort for the employer to meet the award obligation to consult all three employees about all the matters relating to the redundancy prior to dismissing the applicant on the ground of redundancy.

The Commission found that the employer did not take any steps to even attempt to meet the award obligations to consult the salespersons about the redundancies, including the selection criteria it intended to use. The Commission ruled that even though the selection criteria used may have been appropriate it did not excuse the employer from not consulting with all employees.

The warning for employers is to make sure that they consult with all employees that could be affected by the redundancy.

If you are considering reducing the number of employees in your business talk to Andrew first to ensure that you follow all the necessary steps. You can never stop an employee making a claim of unfair dismissal, but you can ensure that any such claim can be defended.