CCIWA’s Employee Relations and Advice centre recieves frequent questions about redundancy, such as the following:  

Q: How do we go about offering alternative employment to someone we want to make redundant? What are the rules?

A: Genuine redundancy can be termed as unilateral termination due to either the job no longer being required to be done by anyone because of changes in the operational environment or because of the insolvency or bankruptcy of the employer.

In the case of the former, s389(2) of the Fair Work Act 2009 (Cth) (FW Act) states redundancy is not considered ‘genuine’ if it would have been reasonable in all the circumstances for the person to be redeployed within either the employer's enterprise or an associated entity of the employer.

To avoid a possible unfair dismissal claim, employers should therefore ensure they exhaust all reasonable alternative jobs and positions available for the employee before dismissing them.

In determining whether the position for redeployment for an employee is reasonable, the Full Bench decision in the Ulan Mines case illustrates employers should consider:

  • whether a position exists or is likely to exist in either the enterprise of the employer or enterprise of an associated entity that fits the knowledge, skills, abilities, and qualifications of the employee
  • if significant training would be required for the employee to perform the role
  • the nature of available positions
  • the location of the redeployment in relation to the employee’s residence, and
  • the remuneration of the position offered.

This includes roles the employer believes the employee may be overqualified for, or where the income or level of responsibility is reduced.

It means employers should offer all suitable roles and not assume that an employee will reject a role simply because there is less pay or responsibility, or a need to relocate.

It is also important that redeployment is not a competitive recruitment process. If a suitable role is found, employers should not expect the employee to compete with other applicants for the role.

In summary, when searching for a suitable redeployment positions, employers must:

  • document all steps taken in consideration of the above criteria
  • ensure the employees are offered all alternative positions, and
  • ensure you do not require employees to compete for the positions.

If the employer is able to find a suitable position of similar conditions, requirements, remuneration, and location, the FW Act s120 provides a mechanism for employers to apply to the Fair Work Commission to reduce the amount of redundancy payable.

For example, in the case of Mandurah Safety, the redundancy amount was reduced by 80 per cent due to other ‘acceptable’ employment being offered to and accepted by the employee.

It was deemed ‘acceptable’ as Mandurah Safety provided a role with effectively the same duties, entitlements and benefits, despite being part-time at 80 per cent of the previous salary.

In any case, genuine redundancy may be subject to additional provisions under the relevant modern award or enterprise agreement.

If you are in the process of initiating a redundancy it is recommended you seek advice from the CCIWA’s Employee Relations Advice Centre on 9365 7660 or email advice@cciwa.com.