What is redundancy?

Redundancy occurs for many reasons. Businesses may have had a significant decrease in revenue or may have been subject to a takeover or amalgamation. In these circumstances an employer may need to shed staff.

‘Genuine redundancy’ is defined in the Fair Work Act as a situation where:

  • The employer no longer requires the persons job to be performed by anyone
  • The employer has complied with any relevant statutory obligations to consult about the redundancy and
  • It would not have been reasonable in the circumstances for the person to be redeployed by the employer.

If dismissal satisfies these conditions and is considered ‘genuine redundancy’ there can be no claim for unfair dismissal.

If the dismissal does not meet this definition, the fairness of the dismissal is assessed with reference to various factors including whether it was harsh, unjust or unreasonable in the circumstances.

Defending a Claim of Unfair Dismissal in NSW

Following a decision of Fair Work Australia in 2011, there is strong precedent for employers to defend a claim of unfair dismissal. This is even if they haven’t followed the relevant procedure of consulting with employees first.

Case Study: Maswan v Escada Textilvertrieb

In Maswan v Escada Textilvertrieb T/A Escada [2011], even though the employer failed to consult in accordance with the relevant legislation, and therefore failed under the definition of ‘genuine redundancy,’ the redundancy was held not to be harsh, unreasonable or unjust, and was therefore not an unfair dismissal.

The case noted that for dismissal to be considered harsh, unjust or unreasonable in an account of redundancy it must be shown that the decision is seriously undermined or there was a serious error in procedure that makes the termination unfair. The case established that in the circumstances consulting the employee would not have had any material impact on the decision, nor negated the clear operational reasons for the redundancy, and thus was not an unfair dismissal.

Can You Defend Claims if Employees Weren’t Consulted?

Subsequent cases have upheld this line of authority, and it is clear that employers are likely to be able to defend claims of unfair dismissal even if they didn’t consult employees before redundancy. If it is demonstrated that consultation would not have had any substantive impact on the decision it is likely the redundancy will not be held to be an unfair dismissal.

If your business is undergoing restructuring and redundancy or you would like more information on defending an unfair dismissal claim, contact Etheringtons’ experienced solicitors on 9663 9800 by emailing law@etheringtons.com.au.