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Redundancy – A dual approach

Redundancy – it’s a tricky subject – it’s filled with legal ‘ifs and buts’, not to mention the impact on the affected employees. This is an area where it pays to have a dual approach.

The first, clearly, is ensuring that the legalities are sorted. That is:

  • Is the position genuinely redundant as defined by the law?
  • And if so, what if any severance is payable?

The Commonwealth legislation provides that the redundancy must be a ‘genuine redundancy’, which is defined as:

  • You no longer need the person’s job to be done by anyone because of changes in the operational requirements of the business; and
  • You’ve followed any consultation requirements in the modern award, agreement, or pre-modern award such as a federal award, a transitional award or a notional agreement preserving state award (NAPSA). Note a failure to consult properly with the employee may give rise to unfair or unlawful dismissal action.

It is not considered to be a genuine redundancy if it reasonable that the person be redeployed by your business or a business entity associated with you.

Once it has been established that the redundancy is genuine, there may be severance payable to the employee. Seek advice on what severance is applicable because this may depend on what award or agreement applies or if you’re operating in a business with more than 15 employees. Note all employees including high income executives have an entitlement to severance under the National Employment Standard (NES) if you employ more than 15 employees.

The second aspect to consider is the impact on the affected employee (or employees) and those that remain in the business:

  • Consider the best way to communicate the news to the employee. Often employees will not hear beyond the words ‘your position has been made redundant’, so you should provide some details in writing for them to review once the shock has settled (making sure it is legally compliant). Pick an appropriate time and place for the meeting.
  • Consider providing some outplacement support for the employee. This can be anything from an inexpensive ½ day CV and interview skills workshop through to a longer 1:1 programme. There are excellent outplacement providers in all states who can also assist by being on site on the day of the announcement to provide immediate support to the employee and the manager who has to break the news.
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