redundancy defined

Handling arrangements for releasing people through redundancy, retirement or dismissal is perhaps one of the more challenging and difficult areas of people management.

Redundancy takes place in two circumstances: 

  1. when the employer no longer requires the employee’s job to be done by anyone
  2. when the employer becomes insolvent or bankrupt. 

As well as mergers and acquisitions, other changes to working practices such as the introduction of new technology, a relocation of workplaces, or a drop in demand caused by economic conditions, can all lead to redundancy for employees. 

Under the Fair Work Act 2009, genuine redundancy is defined as when:

  • the employee’s job no longer needs to be performed by anyone because of operational changes to the business (for example because of relocation, restructures, downsizing or new machinery), and
  • the employer has met the consultation requirements (found in the relevant modern award, enterprise agreement or other industrial instrument).

If either of these requirements has not been met - for example, if the job still needs to be done by someone - it may not be a genuine redundancy. It may also not be genuine if the employee could reasonably be redeployed elsewhere within the company, or within a business entity associated with the employer.

redeployment

Redeployment is being able to move a potential employee facing redundancy to work elsewhere within the business. This option is dependent on whether the employee has the relevant skills, qualifications and experience to undertake another available role, and the size and scale of the employer’s business.

As part of the consultative process, employees facing redundancy should be involved in discussions about redeployment options to determine if available positions are suitable. 


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