What processes should a company follow before making a redundancy payment to you?

If you believe your employer has unfairly or unjustly made your position redundant, it may have failed to follow procedural requirements surrounding the redundancy of your position. Your employer is obliged to follow a process prior to making the redundancy package payment.

Genuine Redundancy

 For your employer to make your position redundant, the position must be genuinely redundant. Failure of the position being genuinely redundant can result in making you eligible to lodge either an Unfair Dismissal Claim or General Protections Claim in the Fair Work Commission.

Section 389(1)(a)  of the Fair Work Act 2009 (Cth) provides that the dismissal of a person will be a genuine redundancy if the employer no longer required the person’s job to be performed by anyone due to changes in operational requirements. For example, if your day-to-day responsibilities begin to diminish, you will likely fall under section 389(1)(a) as a genuine redundancy. However, if your employer has dismissed you for other reasons, and you have seen your position advertised, that is an indication your position may not be genuinely redundant.

Further, section 389(2) of the Fair Work Act 2009 (Cth) provides that a person’s dismissal will not be a case of genuine redundancy if it would have been reasonable for the employee to be redeployed in the employer’s enterprise or the enterprise of an associated entity of the employer. Therefore, your employer is under the obligation to find suitable alternative work for you prior to paying a redundancy package and terminating your employment.

Notice Requirement

 Section 117(1) of the Fair Work Act 2009 (Cth) provides an employer must not terminate an employee’s employment unless the employer has given the employee written notice of the day of the termination (which cannot be before the day the notice is given).

Further, section 117(2) of the Fair Work Act 2009 (Cth) provides that an employer must not dismiss an employee unless the time between the notice and day of termination is at least the minimum period of notice (as per section 117(3) of the Fair Work Act 2009 (Cth) including one additional week if the employee is over 45 years of age and has worked with the employer for at least 2 years) or the employer pays in lieu at least the amount of the notice period at a full rate of payment.

Thus, the employer is obliged to pay the notice period in addition to the redundancy payment and statutory entitlements.

Consultation Requirement

Section 389(1)(b) of the Fair Work Act 2009 (Cth) provides that the employer must comply with any obligations in a modern award or enterprise agreement that applied to the employment to consult about the redundancy, in order for the redundancy to be genuine.

For example, employees covered under the Banking, Finance and Insurance Award 2010 will be covered by additional clauses enforcing the consultation requirement such as:

• the employer must notify employees who may be affected by proposed changes of a major workplace change in production, program, organization, structure or technology (including potential redundancies) as per clause 8.1(a)(i);
• the employer must discuss the introduction of any changes, the effect of the changes on the employee and measures to avert or mitigate adverse effects of such changes on the employee as per clause 8.1(b)(i);
• these discussions must commence as early as practicable as per clause 8.1(b)(ii); and
• the employer must provide in writing to employees all relevant information about the changes including the nature of the proposed changes, the expected effects on the employee and other matters likely to affect the employees as pr clause 8.1(b)(iii).

Additional obligations regarding redundancy may arise from the award as well. For example, in clause 12.4 of the Banking, Finance and Insurance Award 2010 allows an employee one day’s time off without loss of pay during each week of notice for the purpose of seeking other employment.

However, this will all vary from award to award. If you are unsure about what modern award you are covered by or what additional obligations apply to you, please consult with our lawyers for adapted legal advice.

 Further, there has been suggestions that your employer acting unfairly when concluding a redundancy will result in a not genuine redundancy, giving rise to an Unfair Dismissal Claim. For example, this may include failing to give the employee an opportunity to discuss the termination. See example: S. Carl v Collins Trade Services Pty Ltd – 086/99 M Print R1243 [1999] AIRC 90.

 Redundancy Pay Entitlement

 If your employer has not correctly followed all of the aforementioned requirements, your position has likely been made not genuinely redundant and you may be eligible to file for an Unfair Dismissal Claim or General Protections Claim. Alternatively, you may find you have genuinely been made redundant and not been paid the correct redundancy package under per section 119(2) of the Fair Work Act 2009 (Cth). Please contact our lawyers at McDonald Murholme if this applies to you or you have any further questions regarding redundancy, requirements, or any other employment law matters.