This article has been prepared by Colin Biggers & Paisley Lawyers.
In a rapidly changing workplace relations environment, it is essential to keep abreast of our obligations regarding a redundancy, as well as any options a business can access to reduce the burden a redundancy can bring.
The redundancy-related obligations of consultation under any applicable modern awards or enterprise agreement should be adhered to. Even if you are convinced that your employee is award- or agreement- free, it is best practice to consult anyway – consultation doesn’t have to be an onerous process, and doing so provides you with protection in the event that the employee is found to be covered under an award after all.
When conducting larger-scale redundancies, there are further consultation obligations your business must comply with. Section 531 of the Act provides that an employer must notify the union where the decision is made to make 15 or more employees redundant. The employer has the obligation to notify any relevant trade union as soon as practicable after making the decision, before dismissing any employees.
Furthermore, section 530 of the Act provides that an employer must notify Centrelink where the decision is made to make 15 or more employees redundant. Although it is not a requirement to advise Centrelink when there are less than 15 employees being made redundant, it may still be advantageous to consult with Centrelink anyway. Depending on the circumstances, Centrelink can provide support to employees throughout the redundancy process, such as having a Centrelink officer meet with affected employees to explain the assistance available to them, or assisting employees to search for a new job and understand which government benefits they may be eligible for.
As discussed above, making a large number of employees redundant in a short period is taxing on the business in a myriad of ways – not the least in a financial sense. Having to pay out numerous final payments comprising redundancy pay, annual leave, notice, long service leave, TOIL, RDOs can be extremely challenging to manage, particularly if the employees have many years of service. The business should be aware of options it can access in the leadup to making a number of roles redundant, which can ease pressure on the business in an already difficult time.
Applying to the FWC to have the relevant redundancy pay reduced is an option employers may choose to exercise. Section 120 of the Act enables an employer to apply to the FWC to have the payable redundancy sum reduced (down to nil if the FWC considers it appropriate) if the employer has either found other acceptable employment for the employee, or cannot afford to pay the amount payable. In Mason Architectural Joinery Pty Ltd  FWC 1897, Commissioner McKinnon relied on the employer’s ‘significant financial strain’ in reducing the employee’s redundancy entitlement from 7 weeks to 1 week.
However, businesses need to be able to genuinely demonstrate a financial inability to pay in order to have applicable redundancy pay reduced. In Worthington Industries  FWC 1912, DP Clancy advised that despite projected declines in sales and cash flow issues, he could not vary the redundancy payment payable due to evidence that indicated the business has both the means to “pay the full amount of the redundancy entitlement[s]. . . and the money in the bank to do so.” Therefore, when applying to the FWC to vary redundancy pay, it is important to provide evidence that backs up your request.
Finally, if a business cannot pay redundancy pay due to bankruptcy or liquidation, it should advise its employees to contact the Fair Entitlements Guarantee Hotline on 1300 135 040 to seek redundancy and other employee termination payments through the federal scheme established under the Fair Entitlements Guarantee Act 2012.
Read Part 5: Safeguarding employees’ mental and physical health in the time of COVID-19
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.