We have a situation where many award covered employees are potentially going to be made redundant. Do we need to inform any organisation or body if the company is undergoing a redundancy? How much notice of the proposed redundancy does the employer need to give the employees? If a redundancy is communicated and an employee resigns during the period, does the company needs to honour the redundancy payout?
The Fair Work Act 2009(the FW Act) defines genuine redundancy as where the employer no longer requires the person’s job to be performed by anyone because of changes in operational requirements.
Additionally, to prove there was a genuine redundancy, the employer must comply with its consultation obligations under the Act, an award or enterprise agreement.
Allmodern awards contain a standard consultation clause requiring employers to consult with employees and their representatives (such as a union)regarding major workplace change (e.g. a redundancy process) whereas s 531 of the FW Act provides that an employer must notifythe union where the employer decides tomake15 or more employees redundant.
As the business is covered by a modern award then any relevant union must be notified of a redundancy process regardless of the number of employees being made redundant.
The employer must notify any relevant trade union as soon as practicable after making the decision and prior to dismissing any employees.
In addition, the employer must have discussions with the trade union about measures to avert or minimise the proposed dismissals and measures to mitigate the adverse affects of the proposed dismissals (such as finding alternative employment).
Where an employer fails to notify and/or consult with relevant trade unions about the proposed redundancies, s 531(1) of the FW Act enables the Fair Work Commission (FWC) to make an order to require the employer to consult with the union. The result of this could be that the redundancy process maybe delayed.However, the FWC does not have the power to reinstate an employee or to pay compensation.
Section 530 of the FW Act provides that an employer must notify Centrelink where the employer decides to make15 or more employees redundant. The notification must be in writing and in the prescribed form, and set out the reasons for the terminations, the number and categories of employees likely to be affected and the period over which the employer intends to carry out the terminations.
The notification to Centrelink must be made as soon as practicable after the decision is made and before the employees are dismissed.
Although it is not a requirement under the FW Act to advise Centrelink when there are less than 15 employees being retrenched, it may still be beneficial to do so. On some occasions, Centrelink can provide an officer to meet with the employees to explain the assistance available to them. Support from Centrelink may include assisting employees to commence their search for new employment and to understand their social security entitlements.
In terms of the notice given to employees regarding the redundancy, the applicable amount of notice will vary depending on numerous factors.
These factors can include the size of the business in question; the numbers of positions being made redundant; the possible redeployment options and other alternatives proposed by employees. In any case, the timeframe should be long enough to allow the employer to comfortably engage in all consultation and redeployment obligations.
If an employee resigns prior to the redundancy date, they may potentially still be entitled to the applicable redundancy entitlements. If an employee resigns before formal notice of termination is provided by the employer, then this can be construed as a regular resignation and the employee arguably will not be entitled to redundancy entitlements. However, several modern awards contain clauses which cover circumstances where an employee has resigned during the notice period in the circumstances of a redundancy.
Generally, these clauses allow employees who have been given notice of termination in circumstances of redundancy to terminate their employment during the period of notice and still receive the redundancy entitlements they would have received had they remained in employment up to the termination date.
However, these employees will usually not be entitled to full payment of their notice period. Accordingly, it is important to ascertain whether a modern award or other industrial instrument covers the employee in the above situation. In any case, when the employee advises the employer of their resignation, it is important to obtain clarity regarding the employee’s expectations as to whether they believe they will receive a redundancy payout or not.
