Restructuring and Redundancies for Employers
Employers need to be fully aware of their obligations and responsibilities to consult and inform employees when major workplace change is undertaken.
Restructuring and Redundancies for Employers
Employers need to be fully aware of their obligations and responsibilities to consult and inform employees when major workplace change is undertaken.
Restructuring and Redundancies for Employers
Important Issues to Consider on Restructuring and Redundancies
Organisational change is one of the most difficult challenges of business faced by employers. A downturn in business, advancing technology and evolving business needs and focus all lead to the need to regularly assess an organisation’s structure and employee duties. The need to restructure usually involves the requirement to make positions within the business redundant.
Decisions to restructure and/or implement redundancies is an area often leading to dispute and expensive litigation if not properly and carefully managed by employers. It is therefore integral that employers are fully aware of not only their legal obligations and responsibilities, but also the consequences of failing to meet those. In addition, employers need to ensure that they do not use a restructure to address other employee issues.
Redundancy of positions, in particular, can be a complex area requiring a careful assessment of an employer’s business needs, contractual terms and conditions of employment, modern award provisions, enterprise agreements and/or the Fair Work Act 2009. The consequences of failing to adhere to the requirements in these industrial instruments could result in a breach of the provisions of the Fair Work Act 2009 and lead to a finding of the Fair Work Commission that a redundancy was not a “genuine redundancy” as defined under the Fair Work Act 2009, with any resultant termination of employment being an unfair dismissal.
Peters Bosel Lawyers have significant experience in guiding employers through the process of restructuring their business and managing any necessary redundancies so as to minimise the exposure to dispute and costly legal action.
What is a “genuine redundancy” and what is its significance?
When implementing a redundancy, it is important that employers are mindful of the Fair Work Act 2009, which provides that an employee’s termination of employment will not be an unfair dismissal if it can be demonstrated that the termination was a result of a “genuine redundancy”.
It is therefore important that employers are able to demonstrate, by reference to the requirements of the Fair Work Act 2009 that a redundancy is genuine.
While an employer may be able to demonstrate the commercial necessity of a redundancy, in order to be considered a “genuine redundancy”, employers must be able to satisfy the Fair Work Commission that:
- The redundant position is no longer required to be performed by anyone;
- The employer has strictly complied with any obligation in any applicable modern award or enterprise agreement to consult with the affected employees; and
- It would not have been reasonable in all of the circumstances for the employee to be redeployed either elsewhere within the employer’s business, or within the business of an associated entity.
If an employer is able to meet the statutory definition of a “genuine redundancy” then an employee will not be able to successfully access the unfair dismissal provisions of the Fair Work Act 2009.
Peters Bosel Lawyers regularly assists employers in assessing the merits of the redundancy of a position and guides employers through a proper process to ensure that they are able to successfully demonstrate that the redundancy is a genuine redundancy for the purposes of the Fair Work Act 2009.
What are the entitlements of an employee whose position has been made redundant?
Employees covered by the national modern award system may be entitled to redundancy severance pay, in addition to notice of termination of employment, in the event that the position they hold is made redundant.
In the absence of more favourable provisions in common law contracts or enterprise agreements, redundancy severance pay is calculated in accordance with the National Employment Standards, and by way of a sliding scale based on an employee’s tenure of service with an employer.
It is important to note, however, that not all employees are entitled to redundancy severance pay and for that reason it is integral that employers carefully consider the entitlement on a case by case basis. For example, one circumstance in which an employee will not be eligible for a redundancy severance payment is where the employer has 15 or less employees, and is therefore considered a “small business employer” for the purposes of the Fair Work Act 2009. A second example is where an employee is engaged as a casual employee. Casual employees do not have a statutory entitlement to redundancy severance pay under the NES. There are other circumstances which may apply to your organisation depending on each employee’s individual circumstances.
In summary
The demands on an employer during a restructure of a business are considerable. Unfavourable economic conditions, financial demands or other operational concerns can become all-consuming and lead an employer to inadvertently neglect their legal obligations to affected employees.
In order to effectively reduce financial exposure and time-consuming litigation, employers need to understand the legal processes to properly implement a restructure and if necessary, genuine redundancies. To do so, requires careful planning, proper assessment of financial and operational issues and an understanding of the legal framework within which the restructure and any necessary redundancies must occur.
Experienced employment lawyers such as Peters Bosel Lawyers can provide employers with expert advice and guidance to minimise an employer’s risk and ensure the smoothest possible process to achieve necessary business restructures.
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Peters Bosel Lawyers have long experience in guiding business owners through the process of restructuring and managing redundancies.