From 1 July 2009 the Fair Work Act as part of the Government’s Forward with Fairness Regime comes into effect. In an economic climate of declining employment, redundancies tend to become a considered option for employers.

However, employers forced to make redundancies after 1 July 2009, must prove they have proactively pursued all redeployment alternatives in order to avoid adverse litigation and compensation claims.

The new Fair Work Act removes the genuine occupational exemption in respect of unfair dismissal claims and includes certain redundancy rights as part of its proposed National Employment Standards (NES).

As the law currently stands, an employee whose employment is terminated for 'genuine operational reasons' is prevented from lodging an application alleging unfair dismissal.

Operational reasons are defined as 'reasons of an economic, technological structural or similar nature relating to the employer's undertaking, establishment, service or business'. Proving that a termination was not for genuine operational reasons falls on the employee - the employer is simply required to provide evidence to establish the ground rather than an onus of proving it.

Whilst under the new Fair Work Act, unfair dismissal claims are stated as not being available in cases of genuine redundancy, the removal of the 'genuine operational reasons' exclusion, significantly increases an employers obligation to satisfy that a redundancy is not to be deemed unfair.

For example, ‘genuine redundancy’ will not apply to a situation if it would have been reasonable to redeploy the redundant employee in another part of the employer's operations, or that of an associated entity. The obligation will be on an employer to prove that it proactively pursued all alternative options first, including the redeployment of workers into different roles or related companies.

An employer is also legally obligated to contact Centrelink if it plans to make 15 or more employees redundant. Under the new legislation the maximum penalty for such an offence will increase from $1,000 to $3,300.

Employers should also be aware of their obligation under the new laws to consult with and divulge information to trade unions when planning to let 15 or more workers go (providing at least one of the workers is a union member).

When forced to make redundancy decisions in the workplace it is recommended that copies of all emails and other correspondence that indicate you have explored all avenues to retain staff and have followed your consultation obligations will help to minimise and defend any subsequent litigation. Identifying all relevant stakeholders and retaining a thorough record of a documented step-by-step redundancy process will also assist.

Source:  Andrew Bland www.blandslaw.com.au

Article provided by: DSBN Pty Ltd