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Redundancy and Unfair Dismissal

This advice article examines the correlation between redundancy and unfair dismissal, and identifies scenarios whereby a redundancy may allow an employee to file an unfair dismissal claim.

Under the law, an employee is not able to make a claim for unfair dismissal in the case of a genuine redundancy – this then creates the issue of what is the difference between a ‘redundancy’ and a ‘genuine redundancy’.

A redundancy takes place when an employer no longer wishes for the job being done by an employee to be done by anyone, or if the employer becomes bankrupt or insolvent.

A ‘genuine’ redundancy includes the above definition, as well as a requirement that an employer comply with any consultations requirements contained in an applicable Modern Award.

Modern Awards contain consultation requirements, which require an employer to take the following steps where the employer has made a definite decision to introduce major changes in production, program, organization, structure or technology that are likely to have significant effects on employees:

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.

All of the above discussions must be held as early as practicable after a definite decision has been made by the employer to make the proposed changes.

If an employee is a member of a trade union, the employee will also be entitled to have a representative present at all discussions, and the employer will also have to consult with the representative.

If an employer fails to comply with the consultations requirements described above, then an employee who has been made redundant may still be able file an unfair dismissal claim, because the redundancy was not a ‘genuine’ redundancy.

In a recent unfair dismissal case, an employer in Victoria made an employee redundant without complying with the above consultation requirements, and the employee then filed an unfair dismissal claim. The Commission held that the redundancy was not a ‘genuine’ redundancy (because the employer had not followed the above steps), and awarded the employee almost $8,000 in compensation for unfair dismissal.