Redundancy

Workplace redundancies are unfortunately something that many of us will encounter during our working careers. There are many forms of workplace redundancy in Western Australia and I can help provide you with complete redundancy legal advice and representation. For example often redundancy can be dealt with by employee and employer through meditation and other forms of dispute resolution.

workplace redundancy issuesThe concepts of what constitutes redundancy and redundancy entitlements is complicated, particularly in the manner in which a redundancy may be carried out by an employer. It is understating the issue to say that a genuine redundancy will almost always be permitted by the law where it is carried out fairly and justly, but it is true to say that the legal system in Australia does tolerate redundancies as a legitimate tool in protecting a business and those employees whose jobs might just be made more secure by a proper and appropriate redundancy to another employee or employees. The Australian system does not require business proprietors to guarantee security of employment and recognises that economic conditions will change and that a workforce is a cost to capital in orthodox economic theory.

However, an attempt to disguise what is an unfair dismissal as a redundancy will not be permitted and will come undone if the right to manage a business profitably is abused. Furthermore, it is only a reasonable offer of alternative employment, which is a tricky legal concept, which the law will tolerate as an alternative to an employer’s obligation to pay statutory redundancy.

Small business employers are not liable to pay redundancy, but this can be a legal minefield. For example the Fair Work Act provides that as a general rule an employee of a small business is not entitled to redundancy compensation (sec 121). Small business employer is defined in sec 23. However the Act does allow for modern awards and enterprise agreements to make provision for “industry- specific redundancy schemes” to apply in which event they have the same enforceable effect as all lawful terms of modern awards and enterprise agreements (sec 123 (4)(b) and (c). An example of this can be found in clause 17 of the Building and Construction General On-site Award 2010.

Sec 120 of the Fair Work Act 2009 enables an employer to apply to the Fair Work Commission to be relieved of the obligation to pay statutory redundancy pay if the employer, inter alia, obtains other acceptable employment for the employee or employees. A Full Bench has re-affirmed that the employer must be a “strong, moving force” behind the obtaining of acceptable alternative employment and that the fact that the employer may play a small or less than meaningful role, for example by introducing the employees to the prospective employer, is not enough to justify the original employer being relieved of the obligation to make the payments. MUA v FBIS International Protective Services Pty Ltd (2014) FWCFB 6737 delivered on 21 October 2014


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CASE STUDY

Sec 120 of the Fair Work Act 2009 enables an employer to apply to the Fair Work Commission to be relieved of the obligation to pay statutory redundancy pay if the employer, inter alia, obtains other acceptable employment for the employee or employees. A Full Bench has re-affirmed that the employer must be a “strong, moving force” behind the obtaining of acceptable alternative employment and that the fact that the employer may play a small or less than meaningful role, for example by introducing the employees to the prospective employer, is not enough to justify the original employer being relieved of the obligation to make the payments.
MUA v FBIS International Protective Services Pty Ltd (2014) FWCFB 6737 delivered on 21 October 2014

And another observation

Contrary to common myth in the community, an operational decision by an employer to reorganise the allocation of responsibilities from one employee to another, and to terminate the employment of an employee (employee No 1) who as a result has no meaningful work to carry out, is not a redundancy, at least in the sense by which that expression is understood by the common law. The New South Wales Court of Appeal in UGL Rail Services Pty Limited v Janik [2014] NSWCA 436 delivered on 19 December 2014 found that 70% of the duties previously performed by employee No 1 were transferred to his successor (employee No 2) and held that, despite a number of changes having been made to the role, those changes were not sufficient to justify a finding that his position had been made redundant. The changes also included a different job title for employee No 2 and the reallocation of certain responsibilities to other employees within the company. It remains to be seen whether this is the approach which should be taken under the Fair Work Act’s definition of redundancy though which is that a redundancy results from a termination of employment “at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone….” Are the “duties” or “responsibilities” the same as the “job”?