When considering redundancies, the questions that almost all employers have is how do they select the employees who will be made redundant without exposing themselves to a claim for unfair dismissal.
The Fair Work Commission has determined that the process used for selecting employees for redundancy may be irrelevant when determining the fairness of dismissal.
Firstly, let’s look at when a redundancy may not be a genuine redundancy under the Fair Work Act 2009, as in these circumstances the termination may be considered unreasonable. A redundancy is considered genuine if the position is no longer required because of changes in the operational requirements of the business and any obligations under the modern award or enterprise agreement that is relevant to the employee were complied with. Such obligations broadly consist of advising employees that may be affected that redundancies are being considered and consulting with affected employees to discuss proposed redundancies.
Assuming your redundancy is a genuine redundancy, the next step will likely be to determine which positions are to be made redundant which is an especially important step.
In a 2012 Fair Work Commission decision, the employer experienced a downturn in sales and decided to make one of their warehouse workers redundant. The applicant’s employment was terminated by reason of redundancy and he was selected because of his slowness in completing tasks in comparison with his colleagues. The applicant argued that the decision to select him for redundancy was unfair because there was not a valid reason for the dismissal related to his capacity or conduct.
The Fair Work Commission determined that having a valid reason for dismissal related to capacity or conduct is not relevant when selecting an employee for redundancy and the employer experiencing a downturn in sales is held to be a valid reason for dismissal. It was therefore determined that the dismissal was not unfair.
You do need to exercise caution when selecting employees for redundancy to ensure that you are not selecting certain employees for discriminating reasons such as age, sex, religion, marital status, pregnancy and race as using these reasons for selection is prohibited under the general protections legislation and you may find yourself facing a general protections (adverse action claim).
If your business is needing to consider redundancies, and you would like assistance to navigate the process and better understand your legal obligations, then please do not hesitate to get in contact with our office.