Surviving COVID-19: Restructuring and Redundancies
6 August 2020
IN BRIEF: Leading up to our webinar on this very topical subject, CCER’s Employment Relations Specialist Renee Liddy outlines some important advice on what constitutes a ‘genuine redundancy’, and the considerations employers should take before making redundancy decisions in the era of COVID-19.
As Victoria enters a stage 4 lockdown and New South Wales scrambles to control further outbreaks in the community, COVID-19 continues to impact businesses large and small. Organisations have been forced to consider a multitude of options to assist them in surviving not only the health impacts, but the economic and financial fallout of the biggest global and domestic downturn since the Great Depression.
With reductions to the JobKeeper Payment scheme announced, employers may need to re-focus their attention on what their future operations might look like. While JobKeeper has provided temporary relief for many employers and employees, it has also kept businesses afloat that would otherwise not be viable and kept people tethered to jobs that may no longer exist without ongoing support. With the prospect of reduced or loss of Government support, organisations may be faced with a need to restructure or to reduce the size of their workforce to survive.
As with any contemplated restructure or redundancy, there are various factors employers should consider before proceeding.
Before putting restructure plans into action, it’s important to understand the meaning of ‘genuine redundancy’, because when a redundancy is ‘genuine’, it’s not possible for an employee to make a successful unfair dismissal claim.
There are three main factors which affect when a dismissal is a case of genuine redundancy:
- The first is whether the employer no longer requires a person’s job to be performed by anyone, because of changes in the operational requirements of the employer’s enterprise.
- The second is whether the employer has complied with any consultation obligations that exist under a modern award or enterprise agreement.
- The third is whether it would have been reasonable, in all circumstances, to have redeployed the staff member either within the employer’s own enterprise or the enterprise of an associated entity.
Job No Longer Required
If an employee’s position is being deleted and will no longer exist in its current form, this will usually mean that the employer no longer requires the job to be performed by anyone. However, if an employer is restructuring and some or all of the duties are still required, it may be necessary to assess whether the role can survive.
In relation to operational requirements, the onus is on the employer to prove that – on the balance of probabilities – the redundancy was due to changes in operational requirements, rather than because of the employee’s performance or some other reason.
While the Fair Work Act does not define ‘operational requirements’, some examples include:
- a downturn in trade has reduced the number of employees required;
- the employer has been forced to close a site or business;
- a particular project has now been completed;
- the employer has decided to outsource particular positions, duties or functions.
Modern awards and enterprise agreements often contain requirements for employers to consult with employees about major change such as restructures and redundancies. If an employer fails to comply with these requirements, any redundancy may not be considered ‘genuine’ and employers could be exposed to an unfair dismissal claim, as well as being in breach of the award or agreement.
If your employees are not covered by an award or enterprise agreement, there is no direct obligation to consult. However, CCER recommends that all employers undertake a consultation process – particularly in the COVID-19 environment – because employees may have ideas about how job losses could be mitigated. For example, employees may be willing to reduce their hours or take an extended period of unpaid leave. Employees may also raise JobKeeper Payments as a means for mitigating job losses and employers should genuinely consider whether these ideas can be accommodated.
Employers are also required to consider reasonable redeployment opportunities for employees (i.e. whether a job or a position or other work exists to which the employee can be redeployed.) This doesn’t mean subjecting employees to competitive recruitment processes for advertised vacancies, but rather considering whether there are any available positions that the employee has the skills, qualifications and experience to perform.
How Can CCER Help?
Undertaking a restructure can be a challenging and difficult time for any leader, manager or HR professional. If your organisation is considering a restructure, don’t hesitate to contact one of CCER’s Employment Relations Specialists to assist you – and please take the opportunity to sign up for our upcoming Restructures and Redundancies Webinar.
You will also find useful resources on our website including our Undertaking Workplace Restructures Guidelines.
Disclaimer: CCER does not give legal advice and this information should not be taken as such.
Renee Liddy is an Employment Relations Specialist at CCER.