Genuine redundancy and the business decision to shed staff or down-size are often confused. But the Fair Work Commission treats them very differently.
What is genuine redundancy?
An employee cannot make an unfair dismissal claim when they have been made redundant.
Genuine redundancy occurs when:
- Changes in operational requirements mean the work performed by an employee is no longer required. E.g. outsourcing office cleaning to an external provider so the in-house cleaning team is no longer required.
- Duties, job functions and responsibilities are re-allocated so they can be shared amongst existing roles or included as part of newly created roles. For example, the work of a full-time employee might be re-distributed amongst several part-time employees. Therefore, there is no work left for the full-time employee.
Refusing a pay cut is not redundancy
In a recent case of wrongful dismissal, the Fair Work Commission determined an employer could not make staff redundant simply because they refused to take a pay cut. In the case before the Commission, an employer’s client had negotiated lower service costs so the employer asked staff to accept a pay cut. If any employee refused to take the pay cut, they were made redundant.
However, the Commission found variations in remuneration are irrelevant in deciding whether a staff member can be made redundant. What’s important is whether the functions, duties and responsibilities formerly attached to a position are now surplus to the current requirements of the employer.
Talk to us first
There are legitimate ways to reduce staff numbers or to dismiss problem employees. So before you act, talk to us. Call 02 8977 4002.