Covid-19 and Redundancy

Deborah Peppard - HR Director

​​The Covid-19 pandemic has certainly hit a lot of businesses hard. Back in February and March many businesses were either considering, or actioning, redundancies, to ensure they remained viable as the spectre of lockdowns and restrictions became a reality. With the introduction of the JobKeeper wage subsidy, a lifeline was thrown out and businesses had options to continue keeping people employed.  Now that a significant amount of businesses are no longer receiving JobKeeper, the decision to make some roles in the business redundant to try and claw back some of the lost earnings over the past six months is a key strategy many are considering or are already implementing.

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JobKeeper and Redundancy
Restructuring your business to improve efficiencies and/or eliminating roles to decrease overheads are legitimate reasons for needing to make roles redundant. However, whether you are receiving the JobKeeper wage subsidy, whether you are a legacy employer, or whether you never qualified for it in the first place – the rules around due process to consider making a role or roles redundant has not changed! There are specific rules you must follow. 
The need for a redundancy is not enough to make a redundancy genuine. For a redundancy to be genuine, the Fair Work Act requires that an employer ‘comply with any obligation in a modern award or enterprise agreement regarding the requirement to consult with any affected employee’.

Consultation is a Must
To move forward with considering making any role redundant an employer is required to consult with the employee, provide information on any possible re-deployment opportunities (even if these are of a much more junior position or attract a much lower rate of pay) and genuinely consider any feedback the employee provides before finalising a decision. A genuine consultation process usually takes around a week, and we always recommend putting the consultation details in writing to the employee to ensure there is no misunderstanding about the nature of your initial consultation meeting.

An important note is that the Fair Work Commission does not seek to investigate the reason for a redundancy - the FWC does not presume to have better business knowledge and insist companies obey it.  It takes at face value that the company no longer needs the role. However, it will investigate and make comment on any redundancy made without following the proper process or for an illegal reason (discrimination or adverse action). 

So, JobKeeper or not, the rules around the process for making a role redundant have not changed. All employers have legal obligations to go through the proper process, and ethical obligations to their employees who may be facing unemployment in uncertain and difficult times.
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If you are considering making a role or multiple roles redundant, talk to one of our team first so we can make sure you have all your ducks in a row, meet all of your employer obligations and take care of your employees through the process at the same time.  

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