Redundancy and Unfair Dismissal

Employees who have been made redundant may still be able to make an unfair dismissal claim against their former employer if the correct procedure has not been followed during the termination process.

Under the Fair Work Act 2009, an employee is unable to make a claim for unfair dismissal in the case of a ‘genuine redundancy’, however what is the difference between a ‘redundancy’ and a ‘genuine redundancy’?

Redundancy occurs when an employer no longer wants a job being done by a specific employee to be carried out by anyone, meaning that the job would no longer exist, or if the employer becomes bankrupt or insolvent.

In order for it to be considered a ‘genuine redundancy’, the employer must follow any consultation requirements in the award or registered agreement before the redundancy takes place. Failure to perform any of these steps may end up in a terminated employee claiming that the redundancy was not genuine and filing an unfair dismissal claim.

If an employer has decided to implement major changes or restructuring that is going to affect employees significantly, the employer must take these 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.

Discussions must be held as soon as possible after a decision has been made by the employer to make the intended changes.  Employees are entitled to have trade union representatives present at all discussions and the employers must also confer with the representative.

One unfair dismissal claim involves three employees of BananaCoast credit union Ltd. Their roles were made redundant, but they learned a few months later that their employers had hired workers in very similar positions.

All though they were out of the fourteen day lodgement period, the Fair Work Commission found the employees entitled to make unfair dismissal claims as they were unaware that at the time that their redundancy wasn’t genuine.

Another case in Victoria, Nitro Gym made an employee redundant without following the correct procedures and the employee filed an unfair dismissal claim. Fair Work Act Australia found that the redundancy was not a ‘genuine redundancy ‘and awarded the employee close to $8000 in compensation.