Can I be made redundant if my employer cannot afford to pay me when Jobkeeper ends?

Can I be made redundant if my employer cannot afford to pay me when Jobkeeper ends?

On 28 March 2021, the JobKeeper subsidy scheme is ending for all employers. This means that from 29 March 2021 onwards, all employees are to be paid regular wages even if previously the employer was eligible for JobKeeper.

With the continued economic downturn due to the COVID-19 pandemic, many employees are expected to be made redundant as employers struggle to meet wage costs without aid from the Federal Government. It has been clearly communicated, by the ATO and the Fair Work Commission, that all employers are to follow the standards and procedures of actioning a genuine redundancy under the Fair Work Act 2009 (Cth) should the employer wish to reduce its workforce. These standards and procedures must be adhered to regardless of the removal of the Jobkeeper subsidy. 

Section 389 of the Fair Work Act 2009 (Cth) states that for a redundancy to be genuine: 

a) the person’s employer must no longer require the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and 

b) the employer must comply with any obligation in a modern award or enterprise agreement that applies to the employment to consult about the redundancy.

Subsection (a) can be further broken down into two parts. Firstly, the job must no longer be required to be performed by anyone. Secondly, this must be because of changes in operational requirements in the employer’s enterprise. Many employers will validly recognise that per the second part of the requirement, there has been a change to operational requirements due to the end of the JobKeeper subsidy. However, employers may well forget to consider the first part of the requirement, i.e. that the employee’s job itself must no longer be required.

In essence, the genuine redundancy provisions mean that companies have to have a valid business reason to make an employee redundant. A ‘valid business reason’ requires the company shows that the work the employee was performing has become surplus to requirement (Jones v Department of Energy and Minerals [1995] IRCA 292). Therefore, economic downturn alone will not be a sufficient reason for making an employee redundant, and if an employer seeks to rely on the ending of the JobKeeper subsidy as the only reason for the redundancy, it is unlikely this will be a ‘genuine redundancy’ under the Fair Work Act 2009 (Cth).

Additionally, if an employee is covered by a contract, modern award, or enterprise agreement, the terms of that agreement may outline an employer’s obligation to consult the employee regarding redundancy or may impute other further terms in regards to redundancy. If an employer fails to uphold the terms regarding consultation, the redundancy may also be found to be not genuine (UES (Int’l) Pty Ltd v Harvey [2012] FWAFB 5241). 

An employee should be paid their redundancy entitlement, as per the minimum rates set out in section 119 of the Fair Work Act 2009 (Cth) unless they are afforded a greater redundancy entitlement under an applicable modern award, enterprise agreement, or employment contract. Employees are also entitled to be paid the redundancy entitlement on the basis of their salary or wages before any deduction to their wages under the JobKeeper rules. 

If you believe you have been made redundant for a non-genuine reason, believe that your job still exists despite the end of the JobKeeper subsidy, and/or believe that your redundancy payment is incorrect, you should contact a legal professional immediately. 

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