A commercial reality in today’s business world is the very real pressure on employers to reduce costs, which can often result in a necessary reduction in employers’ workforces. Redundancy, and what will be considered to be a ‘genuine’ redundancy, is currently a hot topic before the Fair Work Commission.

As any employer knows (or perhaps doesn’t know), in a redundancy situation, and for those redundancies to be considered to be genuine redundancies, an employer must adhere to its consultation and redeployment obligations. The Fair Work Commission has recently handed down a number of decisions reconfirming just that, and clarifying when it will consider that an employer has genuinely complied with its consultation obligations and considered reasonable redeployment.

So, what does this mean in practice? What do employers need to consider in a restructuring situation, to ensure they are protected from an influx of unfair dismissal claims?

Meeting consultation obligations

An employer must ensure that it has complied with any obligations in a modern award or enterprise agreement that applies to the employment, to consult about the redundancy. While consultation processes will be greatly varied, consultation processes that are too pre-emptory, hasty, or an entirely meaningless or merely a hollow gesture, are likely to be found to be inconsistent with the employers’ consultation obligations.

An employer must engage in genuine and meaningful consultation with its employees and their representatives, not make disingenuous gestures which seek to portray consultation. Employees need to be given an opportunity to mitigate the adverse effects of any proposed redundancies, which could include the consideration of altering employees’ work arrangements, offering part time arrangements or job sharing.

A consultation process must be transparent, fair, and comply with obligations in any award or agreement.

Realistic and practical exploration of redeployment options

When considering whether it is reasonable in the circumstances to redeploy an employee within an enterprise or an associated enterprise, a number of relevant factors need to be considered. These factors will be greatly varied depending on the employer, but might include the qualifications required for the position, the skills, qualifications and experience of the particular employee(s), the location of the position and the level of remuneration.

There is no obligation on an employer to facilitate a process where it dismisses other employees, to create vacant positions for an employee being made redundant to be transferred. Redeployment obligations don’t extend quite that far. However, an employer’s obligations may extend to the employer allowing employees whose positions are redundant to swap with other employees who wish to volunteer for redundancy. The reasonableness of this will of course depend on the circumstances, but could include consideration of:

  • The size of the business and whether it is employing a significant number of employees in the same role as the role being made redundant.
  • The number of employees performing the same or substantially the same role and the training requirements that would be placed on the employer.
  • The locations of the employees being made redundant and the location of the employees who requested or showed interest in a voluntary redundancy swap.
  • Whether voluntary redundancy swaps have been made in similar circumstances in the past.
  • Whether voluntary redundancy swaps have been suggested, by it, as an option to mitigate the effects of the redundancies.

It is handy to note that while there is no general obligation on an employer to implement voluntary redundancy swaps, it may go towards a court or tribunal finding that an employer has done all that is required when it comes to redeployment and compliance with its obligations.

The take out for employers

Employers need to ensure they have genuinely complied with their consultation obligations, and that all reasonable options for redeployment have been considered within their enterprise, or an associated entity, in order for redundancies to be considered genuine.

While there is no hard and fast rule when it comes to whether it is reasonable or not for an employer to redeploy, it is prudent to remember that the onus falls on the employer to satisfy the Fair Work Commission that redeployment would, or would not have been, reasonable in all the circumstances, based on evidence of the steps taken to explore redeployment opportunities. As we have recently seen, this could go as far as considering whether there is another job available as a result of an offer of voluntary redundancy.