Who can use this checklist
This checklist can be used by all employers throughout Australia, except the followingexcludedemployers:
Excluded employers may however, wish to use this document, but they should first obtain legal advice.
Commentary
What is a redundancy?
Termination of employment due to redundancy is a form of dismissal by the employer. It carries with it the concept of involuntary termination of the employee’s employment. However, rather than being a fault based dismissal, redundancy is usually caused by factors such as economic conditions, business efficiency, or technological development.
Generally speaking, termination of employment due to redundancy occurs where:
- an employer has made a definite decision that the employer no longer wishes the job the employee has been doing to be done by anyone; and
- that decision leads to the termination of the employee's employment.
Under the Fair Work Act 2009 (Cth) (the 'Act') a dismissal will not be unfair where the person’s dismissal was a case of a genuine redundancy. Under the Act a redundancy will be genuine if:
- the job will no longer be required to be performed by anyone because of the changes in the operational requirements of the employer’s enterprise; and
- the employer has complied with any obligation to consult contained in an applicable modern award or enterprise agreement.
Possible redeployment
By ensuring that any redundancy is a genuine redundancy and exploring redeployment opportunities this will assist employers in defending an unfair dismissal claim brought by an employee on the basis that the redundancy was harsh, unjust or unreasonable.
Accordingly, employers must consider, prior to terminating an employee due to redundancy, whether it would reasonable in all the circumstances for the person to be redeployed within:
- the employer’s enterprise; or
- the enterprise of an associated entity of the employer.
Record keeping
Employers should keep records of attempts made to re-deploy employees. Records of employer attempts to search for alternate jobs and the reasons why redundancy was necessary should also be retained (in the event a claim is made). Additionally records should be kept of the discussions with employees in connection with these matters. Employers should update the personnel file to note termination was for redundancy.
Legal advice
If you are unsure when terminating the employment of an employee whether the circumstances constitute a redundancy, you should seek legal advice about this matter. If the termination of an employee's employment is incorrectly classified as a redundancy and a redundancy payment is made, there may be taxation consequences for both the employer and employee. You should obtain taxation and legal advice about these issues if you are unclear as to the true nature of the termination.
Additional obligations apply when you are terminating the employment of 15 or more employees. Before carrying out a redundancy employers should consult their agreements and awards to ensure they comply with any relevant requirements.
Mandatory severance pay
National system employers should be aware that the Act introduces mandatory severance pay for employees made redundant in workplaces that are not a 'small business employer' as defined by the Act.
An obligation to provide severance pay under the Act applies from 1 January 2010. Importantly, continuous service (relevant to the calculation of severance pay) under the Act will only start to accrue from 1 January 2010, where an employee previously had no entitlement to severance pay as at 31 December 2009. Advice should be sought in relation to severance payments if you are unsure of your obligations under the Act.
Advice should be sought in relation to severance payments if you are unsure of your obligations.
Further considerations
Where 15 or more employees will be terminated due to redundancy, employers must notify Centrelink of the redundancies prior to any termination. If any of the employees is a member of a union, employers must also notify the unions prior to the termination of the employees. A form of that notification is available at this website.
Appropriate care needs to be taken in selecting employees for redundancy in order to avoid unlawful discrimination claims.
If you are unable to meet all the requirements in the checklist, you should seek legal advice.
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Important note to subscribers
The commentaries and documents in HR Advance are updated as necessary, to keep them relevant. You should familiarise yourself with the relevant commentary each time you create a document.
This document has been drafted to suit a wide variety of businesses, with a number of options available to enable you to customise the document to better suit your business. Nevertheless, you may need to make other changes to the document so that it suits the specific needs of your business. If you make additional changes, we cannot guarantee that the changes and modifications you make to the document will be legally compliant or enforceable.
This commentary and any additional information provided to assist you in creating this document, does not constitute legal advice.
If you are unsure about any aspect of this document (including the changes or amendments you make to it), you should seek appropriate advice from a lawyer, skilled in these issues. You should consult with your financial advisor in relation to any relevant taxation or financial issues concerning the document you create.
After creating this document, you should read through it carefully to make sure it meets your business needs and is consistent with other industrial instruments, policies and procedures which operate in your workplace. This commentary is not designed to be provided to employees or other workplace participants. |
Further information Further information on how to use this document can be found at the 'How to use checklists' link on the Checklists page of the HR Advance website.
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