Redundancy and Unfair Dismissal
Recent case law suggests that an employee whose position has been made redundant may still be able to take unfair dismissal action if their former employer has failed to follow the correct procedure in effecting the redundancy.
Under the Fair Work Act 2009, an employee cannot make a claim for unfair dismissal in the case of a “genuine redundancy”. The question to ask is: what is the difference between a 'redundancy' and a 'genuine redundancy'?
Redundancy takes place when an employer no longer wishes for the job being done by an employee to be done by anyone, or if the employer becomes bankrupt or insolvent.
However, in order to make a redundancy 'genuine', every Modern Award specifies certain steps that must be taken by an employer before the redundancy takes place, and a failure to take such steps may permit an affected employee to claim that the redundancy was not genuine, and file an unfair dismissal claim.
When an employer has made a definite decision to introduce major changes in production, program, organization, structure or technology that are likely to have significant effects on employees, the employer must take the following steps:
1. Notify the affected employee(s) of the proposed changes
2. Discuss the proposed changes with the affected employee(s), including possible measures to reduce the adverse effect on employee(s)
3. Give proper consideration to matters raised by affected employee(s)
4. Provide the affected employee(s) in writing with relevant information about the proposed changes, including the nature of the changes proposed and the expected effect on employees.
All discussions are to be held as early as practicable after a definite decision has been made by the employer to make the proposed changes.
If an employee is a member of a trade union, the employee will also be entitled to have a representative present at all discussions, and the employer will also have to consult with the representative.
In a recent unfair dismissal case, Nitro Gym in Victoria made an employee redundant without following the above steps, and the employee subsequently filed an unfair dismissal claim. Fair Work Australia held that the redundancy was not a 'genuine redundancy' (because the employer had not followed the above steps), and awarded the employee almost $8,000 in compensation for unfair dismissal.
This case demonstrates the importance of following the correct procedure when making an employee's position redundant.
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