JobKeeper Series. Part 2: Is our ability to make an employee redundant impacted by our eligibility for JobKeeper?

This article has been prepared by Colin Biggers & Paisley Lawyers.

Under the Fair Work Act, a dismissal is a genuine redundancy if the business no longer requires the person’s job to be performed by anyone because of changes in the business’s operational requirements. It is common to make roles redundant for financial reasons (i.e. the business cannot afford to retain certain roles, therefore redundancies are used as cost-cutting measures) or operational reasons (i.e. the business simply does not need the job in question to be performed anymore, perhaps due to restructuring or a drop in demand).

The reason behind making a role redundant (be it financial or operational) may be relevant in JobKeeper circumstances. The JobKeeper FAQ Factsheet indicates that an employee may be stood down indefinitely and paid the JobKeeper supplement if eligible, thus indicating that if you are a business which is eligible for JobKeeper, making someone redundant for financial reasons may be subject to challenge, as there is always the option of simply standing an employee down and paying them the JobKeeper payment.   

In the recent case of Worthington Industries [2020] FWC 1912, Clancy DP took into account the employer’s eligibility for the JobKeeper supplement in rejecting the employer’s argument concerning incapacity to pay. DP Clancy indicated he was happy to keep the matter open for consideration until the business has ascertained its JobKeeper eligibility and considered the prospect of rehiring the workers they had made redundant, and presumably standing them down on JobKeeper. 

However, this approach does not appear to have application in a situation where the employer can demonstrate that the role no longer exists due to operational requirements. Accordingly, it is important to remember that while you can make a JobKeeper-eligible employee redundant, putting together a strong business case demonstrating the operational reasons behind the redundancy is an important step in the process.

Read Part 3: The Importance of a Strong Business Case

Disclaimer: This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2020.