Redundancy and Covid-19

Redundancy process and impact of COVID-19

A redundancy of a job can occur in a number of circumstances, must be legal, and requires employers to go through a number of steps.

This article will answer:

• What can trigger a redundancy?
• Are all redundancies legal?
• What do I have to do if I want to make an employee redundant?
• What if I have been made redundant, but I think it’s a non-genuine redundancy?

What can trigger a redundancy?

A job can be made redundant because of factors that impact a specific company, or factor that affect the broader community. Some examples of reasons that a job can be made redundant include:

• New advances in technology (such as the development of a machine to complete a task previously completed by a person)
• Decreased activity leading to lower company sales or production
• Companies ceasing to operate
• Movement of a job to another state or overseas
• Mergers or sale of a company, leading to restructuring of job roles

Are all redundancies legal?

Circumstances in which a redundancy is legal, a ‘genuine redundancy’, are outlined in section 389 of the Fair Work Act 2009 (Cth). These include if:

1. a company no longer requires the job to be completed because of changes in the operations of the business; and
2. the company has complied with redundancy requirements in any relevant modern award.

However, a non-genuine redundancy is possible if an employee could be reasonably redeployed in another role in the company or an associated entity.

If you are an employee and believe that your redundancy is not a genuine redundancy, please contact our friendly staff at Gorval Lynch on 1300 031 998 or info@gorvallynch.com.au who will be more than happy to help you.

What do I have to do if I want to make an employee redundant?

If you intend to make a job redundant, there are three steps to follow:

Step 1: Consult with an employee about their redundancy

If an employee’s job is covered by a modern award, the company is required to follow a consultation process with the employee.

The consultation process requires the company to inform affected employees about changes to their employment, provide them with information about these changes, discuss how to minimise the negative effects of any changes and consider any suggestions from employees about the changes. 

Step 2: Provie the employee(s) with a written notice of termination

An employer must provide an employee whose job is being made redundant with a written notice outlining the day of their termination.

Step 3: Pay the employees(s) their notice period, or alternatively, enable the employee(s) to work through their notice period.

The notice period that an employee is entitled to, depending on the years they have worked for the company, can be found on the Fair Work Commission’s website here.

Some employees are not entitled to receive notice, including employees that are casual, on a fixed term contract, are dismissed for serious misconduct, or certain employees in the building and construction or meat industry.

Step 4: Pay the employee(s) the redundancy pay they are entitled to.

To determine the redundancy pay an employee is entitled to based on the years the employee has worked at the company, please visit the Fair Work Commission’s website here.

Some employees are not entitled to receive redundancy pay, including employees employed for a fixed period or season, are dismissed due to serious misconduct, casual employees, trainees for a fixed length, apprentices, and employees of a small business (less than 15 employees). 

If an employee’s job is made redundant due to COVID-19, they may be entitled to redundancy pay. For more information, please visit the Fair Work Commission’s website.

What if I have been made redundant, but I think it’s a non-genuine redundancy?

If you think you are the victim of a non-genuine redundancy, you should follow these steps:

1. If you are covered by an award, employment contract or agreement that specifies how to deal with disputes, you must follow that process.
2. If you don’t have any of the above, you should seek to resolve your dispute internally with your employer.
3. If you cannot resolve the problem internally, seek the advice of the Fair Work Commission by contacting 1300 799 675.
4. If the Commission directs you to seek the services of a lawyer, contact our friendly staff at Gorval Lynch on 1300 031 998 or info@gorvallynch.com.au who will be more than happy to help you.