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Warren Clark

The Roadmap to redundancy

February 2018

It is that time of year again. Across most businesses, half-yearly budgets are being assessed and contracts evaluated for profitability rolling into the new year.

It might not come as a surprise to you that alongside these assessments, around this time of year NatRoad receives a notable increase in redundancy enquiries. While workplace relation laws do not stop employers from making workers redundant, there are steps that need to be followed to ensure you aren’t left in a difficult situation as an employer. Sometimes these steps include ensuring you’ve calculated and arranged payment of additional monies, such as leave balances and any redundancy pay entitlements.

Redundancy is defined as a situation where an employer decides that the job the employee was doing does not need to be done by anyone. It is not the ‘person’ that becomes redundant but the ‘position’ they occupied. It can also occur when a company becomes insolvent or bankrupt. Often, redundancy comes about due to reasons such as the introduction of new technology, sales downturns, a restructure or the company relocating. If you’re interested, more information regarding the classification of redundancy can be found on the Fair Work Commission’s website.

One of the key benefits NatRoad members can access with their membership is free, basic, over-the-phone workplace advice. Our team of experts have years of experience in dealing with matters of workplace law and industrial relations. This includes the area of redundancy and the steps a business needs to follow to ensure it’s not facing a case of unlawful termination.

We’ve found, for the most part, redundancy occurs most frequently in the road transport industry because of a restructuring of the fleet, or where a business finds that it has slowed down due to a contract not being renewed. Whilst the industry’s freight task is growing, there are also many changes in technology that affect the way people are employed and the nature of the vehicles they drive. An example of a technology to watch in this space is automated vehicles, which we’ve found is a worry for many drivers out there.
When it comes to making a position redundant, it pays to ensure you’re following the correct process – getting it wrong could come at great cost. In some cases, courts have imposed penalties exceeding back-pay orders of up to $374,000 against individual transport companies. Typically, these decisions were made following investigations and legal actions conducted by the Fair Work Ombudsman.

The law also makes a distinction between a genuine redundancy and a non-genuine redundancy. The Fair Work Ombudsman says that a genuine redundancy is when “the person’s job doesn’t need to be done by anyone,” and when “the employer has followed any consultation requirements in the award, enterprise agreement or other registered agreement.”

For instance, a small-business employer is not required to provide redundancy pay under the National Employment Standards where an employee’s position becomes redundant. However, small businesses may have to pay redundancy benefits because a modern award or an enterprise agreement says so (though it’s worth noting that that isn’t noted in the two major transport awards).

You may have to deal with unfair dismissal claims where practices of genuine redundancy have not been met. For example, this may occur when the employer still needs the employee’s job to be done by someone (ie hires someone else to do the job), or has not followed relevant requirements to consult with the employee about the redundancy under an award or registered agreement. Another instance that falls into this category is where the business could have reasonably, in the circumstances, given the employee another job.

The point of it all? Redundancy is complicated, and it makes sense to get proper advice before taking any steps down the path you’ve planned. NatRoad wants to help businesses do the right thing and eliminate the risks involved in dealing with redundancy.

If you’re an existing member thinking about making redundancies in future, please get in touch so we can guide you down the right path. Not a member yet? Maybe it’s time to make a smart decision for your business.

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