Responses by Australian national law firm Holding Redlich partner Stephen Trew and senior associate Jennifer Teh.
Is there a requirement in Australia for employers to legally justify redundancies and if so, what reasons do they need to provide?
No. However, if the employee is eligible to make an unfair dismissal claim, the employer can defend the claim by establishing that the dismissal was a case of a “genuine redundancy”, which involves proving that the person’s job was no longer required to be performed by anyone because of changes in the operational requirements of the employer’s enterprise.
What is the statutory minimum notice period for redundancies (if any)?
Under the Fair Work Act 2009 (Cth) (FW Act), the length of the minimum notice period that an employer must give for a redundancy will depend on the employee’s length of continuous service, ranging from one week for less than one year up to four weeks’ notice for five or more years. An additional one week must be provided where the employee has at least two years of continuous service and is aged over 45 years.
What is the statutory minimum calculation for redundancy payments (if any)?
For eligible employees, the FW Act provides a sliding scale of minimum redundancy payments based on the length of the employee’s continuous service, starting from four weeks’ pay where the period of service is at least one year but less than two years and up to a maximum of 16 weeks for at least nine years but less than 10 years of service. After 10 years, the payment falls back to 12 weeks.
According to law, what are the main steps that employers must take during a redundancy process?
There is no prescribed process under the FW Act. However, if the employee is covered by a modern award, the employer must consult about the proposed redundancy by advising the employee of the proposed redundancy and giving them an opportunity to provide input on issues such as selection, payment and alternatives to redundancy. After the consultation process, the employer must communicate the final outcome and reasons to the employee.
Often employers will have their own policies made available to all staff and which detail a similar process.
What are the consequences for employers who fail to comply with redundancy laws? What kind of compensation can employees claim, and is the amount capped?
A court can impose penalties of up to $33,000 on body corporates and up to $6,600 on an individual person, for each breach of the FW Act, which includes failure to pay statutory redundancy pay and failure to comply with the consultation obligation in a modern award. The Court can order the employer to pay the penalty directly to the employee as well as any redundancy pay that is owing. If an employee is successful in an unfair dismissal claim, they may be awarded compensation of up to 26 weeks’ pay.
Most banks would have their own redundancy policy which provides an amount of redundancy pay based on the employee’s years of service with the company, which is generally payable unless the employee can be redeployed to a suitable alternative position. These internal redundancy policies are generally more generous than what is provided under the FW Act and include three stages being the notification of the potential redundancy together with consultation, notification of redundancy and finally potential redeployment opportunities. For example, the ANZ currently provides non-TEC staff redundancy payments based on a scale of seven weeks for the first year of service and four weeks for each year thereafter up to the 10th year.