What is a genuine redundancy?

A CHALLenGInG eCOnOMIC enVIROnMenT, THe PAnDeMIC AnD A SPATe OF PRInCIPAL COnTRACTOR COLLAPSeS HAVe Seen A nuMBeR OF eMPLOYeeS MADe ReDunDAnT In ReCenT TIMeS. THeRe ARe SeVeRAL GROunDS On WHICH An eMPLOYeR MAY DISMISS An eMPLOYee, BuT WHAT IS A GenuIne ReDunDAnCY?

For employers covered by the national system of employment laws, any redundancy must be a ‘genuine redundancy, as defined under section 389 of the Fair Work Act. essentially, this definition includes three elements which must each be fulfilled:

½ the position no longer needs to be performed by anyone; ½ the requisite consultation was undertaken; ½ the dismissed employee could not reasonably be redeployed elsewhere in the company (or associated entities).

If there is a genuine redundancy, through a jurisdictional objection, an employer can prevent an employee from bringing an unfair dismissal application.

The importance of establishing genuine redundancy was underscored in Maria Ranchod v Dog and Bone Holdings Pty Ltd [2021] FWC 6093. In this case, a former marketing director was purportedly made redundant as a result of a downturn caused by the COVID-19 pandemic, before filing an unfair dismissal application. While there was a downturn, Deputy President Ashbury found there were no changes in the operational requirements of the business - the marketing position was still needed. Instead, the COVID-19 downturn was used by the chief executive to “disguise” the marketing director’s dismissal, her being his ex-wife.

On this basis, the jurisdictional objection was rejected. Continuing, Deputy President Ashbury found the marketing director was unfairly dismissed, awarding her $27,000 plus superannuation in compensation.

Before considering a redundancy, employers should seek advice on their legislative obligations and measures for reducing risk from their local neCA Branch.

Disclaimer: This summary is a guide only and is not legal advice. For more information, call your local NECA branch –NECA ACT/QLD/NSW/TAS 1300 361 099, NECA SA/NT (08) 8272 2966, NECA VIC 1300 632 247, NECA WA (08) 6241 6129.