Redundancies may soon be on the rise. What are your rights?
If you can, you always look ahead. So your not ambushed by employers, politician’s, bank managers, is always a good thing if the going starts to get a bit tough. Questions to ask How to tell if your redundancy is genuine, With a recession looming, will redundancies increase?, Redundancies may soon be on the rise. What are your rights?, This article is how to ensure your redundancy is genuine. Protect your rights, know where you stand before it is to late.
Redundancies may become more common in the next few years as the Australian economy heads toward a likely downturn. Of course, many redundancies will be genuine. However, some unscrupulous employers may use a faltering economy as an excuse to cull staff for reasons unrelated to financial survival. It can be a bad redundancy but still a genuine redundancy, which means your excluded under s389 of the Fair work Act from pursuing a unfair dismissal or general protections claim. So, how can you tell if a redundancy is genuine or not?
Here’s why we may soon see an increase in redundancies
The Australian economy, like that of many nations, has in recent years experienced a rapid rise in inflation. In the year preceding March 2021, the Consumer Price Index hit a 20-year high, rising 5.1%. This saw the Reserve Bank of Australia raise interest rates by 25 basis points from 0.10 percent to 0.35 percent in May – the first rate hike in more than 11 years. And economists are predicting further rate hikes throughout 2022.
Recession is likely, however wages are still rising
These economic headwinds suggest that the Australian economy could soon experience a downturn. In fact, some are predicting that the economy could potentially be in recession by 2024. At the same time, however, wage growth has in recent years been steadily increasing. Wages grew by 2.4% over the year to March quarter 2022, with the annual rate of growth rising in each of the last five quarters, from a low point of 1.4% in December quarter 2020.
What all this means is that an economic downturn, combined with continued wage growth, will likely see an Australian labor market where redundancies are increasingly common. Employers will be looking to cut costs to offset diminishing profits. And for many, making staff redundant will be an easy way to do just that.
It’s critical to understand the law regarding redundancies
In uncertain times, it’s often hard to predict if you yourself will be safe from a redundancy. It can happen to anyone, out of the blue. That’s why it’s critical to understand your rights when it comes to being made redundant. Also, to be aware of the legal obligations of your employer.
After all, some unscrupulous employers may take advantage of the economic downturn, using it as an excuse to make staff redundant. That’s why all Australian organisations are bound by the obligations of the Fair Work Act 2009. It provides protections to help ensure that when employees are considered surplus to requirements, it’s done for genuine reasons.
What is a genuine redundancy?
Fair Work states (section 389) that an employee has experienced a genuine redundancy if it contains the following three elements. Firstly, that there is no longer any requirement for their job to be done by anyone. This could be because of a business restructuring, the position being relocated interstate or overseas, or if a business decides to close, among other reasons.
Secondly, the employer must consult the employee about the redundancy. This must be done in accordance with the requirements of the relevant award or enterprise agreement. The need to consult the employee, however, is only required if the award or enterprise agreement contains the requirement to do so. Most, however, do outline this obligation.
The third element of a genuine redundancy is that it wasn’t reasonable for the employee to be redeployed within the employer’s business or an associated entity of the business. If the employer failed to consult the employee of their redundancy, then it’s likely that they didn’t attempt to redeploy the employee.
How can you tell if a redundancy isn’t genuine?
Fair Work outlines several tell-tale signs of when a redundancy isn’t genuine. This includes if the redundant employee’s position is later back filled by someone else. Also, if the employer didn’t consult the employee about their redundancy, if required by the award or enterprise agreement. And, if the employer didn’t attempt to redeploy the employee.
It should be noted that an employer has the right to run their business as they wish, therefore it’s their decision who they make redundant. However, an employer can’t make an employee redundant for a reason prohibited by the Fair Work Act, as well as state or federal anti-discrimination laws. This includes, for instance, making an employee redundant because they have fallen pregnant or because they have made a complaint about their employer. (This you can pursue as general protections claim).
Not all genuine redundancies are good, however
Just because a redundancy meets all the criteria of being genuine, it doesn’t necessarily mean it was a good decision. Employers often decide to cut the wrong employees or too many employees. Specially in uncertain times. An example of this are Australia’s universities, which were hit hard financially when COVID-19 prevented international students from entering the country. As a result, many universities used the uncertain environment brought about by the pandemic to make significant structural changes. This included making up to 27,000 staff redundant.
“If you want to restructure departments, faculties and courses, you need a narrative,” Frank Larkins, emeritus professor at the University of Melbourne, told the Financial Review this month. “COVID-19 and the uncertainty that came with it gave university leaders that.”
But now with international students allowed back into the country, universities are facing the prospect of being understaffed. And it’s for this reason that Professor Larkins believes the redundancies experienced in the tertiary sector went too far. “As it turns out, some universities probably cut too deep,” he said. “I mean, 66 percent of all the people who lost their jobs were casuals and that has a pretty deep impact.”
When the Fair Work Commission decides a redundancy isn’t genuine
Universities, of course, weren’t the only organisations to use COVID-19 as a reason – genuinely or otherwise – to cut staff and costs. An unfair dismissal case decided by Fair Work in 2020 helps shed light on the obligations employers must satisfy to ensure a redundancy is genuine.
The case – Rachael Freebairn v Dandiie Pty Ltd – involves an administration assistant, Rachael Freebairn, who was made redundant by NSW-based TJL Business Advisors & Accountants. The company had experienced a significant downturn in revenue as a result of COVID-19, so it needed to slash costs. And the administration was the first on the chopping block.
The admin assistant is given scant information about her redundancy
In March 2020, the partners of TJL decided that the hours of the administration team would be reduced. A meeting was held with Ms Freebairn and a colleague, in which they were informed of the impact COVID-19 was having on the business.
Ms Freebairn was told that she would be financially better off if she didn’t keep her job at TJL and instead went on JobSeeker. She was issued with a dismissal letter and separation certificate, which were the only two written notices she was provided during her redundancy process. Ms Freebairn was then then asked if she had any questions. She said no, and her employment was terminated. This meeting lasted no longer than 15 minutes.
The admin assistant challenges her redundancy at the Fair Work Commission
As an administration assistant, Ms Freebairn was covered by the Clerks – Private Sector Award 2020. Under the award, an employer has a duty to consult with employees if they are affected by a major workplace change like a redundancy. During this consultation, they must:
- Give notice of the changes to all employees who may be affected by them
- Discuss the changes with affected employees. This includes the introduction of the changes, their likely effect on employees and measures to avoid or reduce the adverse effects of the changes
- Provide in writing all relevant information about the changes to employees and their representatives. This includes their nature, expected effect on employees and any other matters likely to affect employees.
- Promptly consider any matters raised by the employees about the changes
Fair Work found that TJL failed to meet the consultation obligations required by the Clerks Award. It therefore ruled that Ms Freebairn’s dismissal was unfair and not a genuine redundancy.
“This obligation is not met by merely asking employees whether they have any questions, comments or suggestions,” said Fair Work Commission Deputy President Tony Saunders.
“Nor is it met by informing an employee, as happened in this case, that the employee will be marginally better off financially by being dismissed and in receipt of JobSeeker payments than by remaining in employment on reduced hoursDP Saunders
Employee made redundant for being pregnant
Sometimes, employers have no shame in making employees redundant. This is what happened to a receptionist in the general protections case Mrs On Ni Liu v Compuworld Pty Ltd (C2019/2083). The receptionist, On Ni Liu, had worked for Compuworld for a decade when in 2016 she noticed something awry with her payslip. Incredibly, this was the first payslip Ms Liu had received and it stated that she had a negative annual leave balance of 1.77 hours.
Ms Liu asked her manager why she had a negative leave balance and argued that the days she had taken off were in fact sick leave. She was then informed that the medical certificates she had provided Compuworld for her sick leave had been destroyed. Ms Liu was then told that she would need to resubmit her medical certificates to prove she was actually sick. So in her own time, she called all the doctors she had visited during those past sick days. She received replacement medical certificates and submitted them to her manager.
Ms Liu’s manager recredited some of the days back to her leave balance. But the manager then said that not all Compuworld staff are entitled to annual leave loading. Ms Liu’s leave balance, therefore, was still in deficit. The fact that Ms Liu had made an inquiry regarding her leave entitlements would later form a key part of her non-genuine redundancy general protections claim.
Employer callously denies employee her rights due to pregnancy
This is where this case shows just how shameful some employers are when their workers fall pregnant. In October 2018, Ms Liu submitted a request for sick leave and provided a medical certificate. In the request, she outlined that she had been recently diagnosed with gestational diabetes.
Ms Liu’s manager initially refused her sick leave request, telling her that she would need to take annual leave. So Ms Liu contacted the Fair Work Commission for advice, which confirmed that she was entitled to sick leave. Upon telling her manager that she was entitled to sick leave, he reluctantly approved it.
“It will be hurtful to my baby:” Ms Liu’s unborn child put in danger by manager
Then in November, Ms Liu requested that she move from the reception desk area to the back office. This was because she feared painting work in the reception area “may be harmful to my baby.” Ms Liu was allowed to move away from the reception area, but after three days, she was told to return. She refused, saying that it “will be hurtful to my baby.”
Not only was Ms Liu forced to return to the reception area, her manager also asked her to sweep the showroom floor. The manager told her that as Ms Liu was pregnant, sweeping the floor would provide good exercise. Shortly after, Ms Liu made another request for sick leave. She provided a medical certificate to her manager. This stated that she would need to attend regular medical appointments to treat her gestational diabetes.
Employer denies Ms Liu her maternity leave rights
Then at the end of November, Ms Liu verbally informed her manager that she wanted to take 11 months of maternity leave from February. Her manager responded by saying that there may be changes to the business soon, and that her role may be deemed redundant. Or that it would no longer be a full-time role, but instead, a casual role
Another manager told Ms Liu that Compuworld’s sales were declining. And as such, the manager said that she was considering whether to dismiss Ms Liu. Ms Liu responded by saying that Compuworld could not simply say that her position was redundant. Regardless, her managers reiterated that her position would be made redundant early in the new year.
One of Ms Liu’s managers then told her that she should not return to work after her maternity leave. They then said that she was no longer suitable for full-time work. This was because Ms Liu was “pregnant and of an older age.” Also, because she had “many sicknesses such as gestational diabetes.” Ms Liu told her managers that she was in shock at what they said. And she immediately felt that at that moment, her managers had decided to dismiss her and make her redundant.
Ms Liu is made redundant and dismissed by Compuworld
About an hour later, Ms Liu’s manager approached her at her desk and handed her a letter. Ms Liu refused to take it, and at the same time, handed her manager her maternity leave application. Then, about 10 minutes later, Ms Liu’s other manager emailed a letter saying that she had been dismissed.
The dismissal letter stated that Compuworld had been experiencing reduced sales. And therefore, Ms Liu’s role had been made redundant. Ms Liu replied to the email be emailing her maternity leave application to her manager. But her manager simply responded by emailing back her dismissal letter.
Employee makes a general protections claim with the Fair Work Commission
Following her dismissal, Ms Liu made a general protections claim with the Fair Work Commission. In it, she claimed that she had been made redundant and was dismissed as a result of exercising a workplace right. Specifically, that Compuworld had taken adverse action against her for inquiring about her leave entitlements. Also, for being dismissed because of her pregnancy and physical disability (namely, her gestational diabetes).
Ms Liu also claimed that Compuworld had made it difficult to obtain an employment separation certificate. This meant that she was unable to receive unemployment payments from Centrelink. She also claimed that she wasn’t paid money owed to her. Ms Liu also said that she had had a very traumatic birth and was therefore unable to work. And that her redundancy and the treatment she experienced from Compuworld contributed to her post-natal depression.
Employer makes its case at the Fair Work Commission
Compuworld argued that it had made Ms Liu redundant only because of the declining sales of the business. The company claimed that Ms Liu was made redundant in order to ensure that “the business can continue to survive.” The company said that her position was not sales related, and was therefore made redundant. Compuworld also claimed that it had offered Ms Liu sales training, but she had dismissed the idea.
The company also claimed that it had intended to make Ms Liu’s position casual and not dismiss her entirely. One of Ms Liu’s managers also claimed that he didn’t know about her pregnancy until after he had dismissed her.
The Fair Work Commission rules on the general protections case
In considering the circumstances around Ms Liu’s dismissal and redundancy, the Fair Work Commission found Compuworld’s arguments wanting. It accepted that the company’s sales had declined. However, the Fair Work Commission found that:
- Ms Liu’s redundancy would have had no effect on Compuworld’s dire financial position.
- The timing of Ms Liu’s redundancy and dismissal was at odds with Compuworld’s belief that it was suffering financially. Namely, because it had happened about a month after two other employees were made redundant. If Compuworld’s financial position was so dire after making those redundancies, the Fair Work Commission found it strange that it waited over a month to also make Ms Liu redundant.
- Ms Liu’s manager did in fact know that she was pregnant prior to her being dismissed and made redundant. The Fair Work Commission stated that the manager’s testimony was “unconvincing” and that he wasn’t a reliable witness.
- Ms Liu wasn’t told by Compuworld that the company was in a dire financial position leading up to her dismissal and redundancy.
Made redundant for illegal reasons
Given these reasons, the Fair Work Commission ultimately ruled that Ms Liu was dismissed and made redundant for illegal reasons. It agreed that adverse action had been taken against her. Namely, because she had sought sick leave to manage her gestational diabetes. And because she was dismissed while Compuworld knew that she was pregnant.
As compensation, the Fair Work Commission ordered Compuworld to pay Ms Liu a total of $37,100. This included compensation for past economic loss and unpaid superannuation contributions. Also, for Commonwealth government paid maternity leave and. Ms Liu was also awarded $15,000 in damages for the non-economic loss that she suffered due to Compuworld’s actions.
Employers can reduce redundancy pay if redeployment isn’t accepted
As we outlined earlier, an employer must make a reasonable attempt to redeploy an employee prior to making them redundant. That is, within the employer’s business or that of an associated entity. The law requires the conditions of the alternative role to be the equivalent of, or not less favourable than, the role that was made redundant.
But what many don’t know is that if an employee refuses to accept the redeployment, the employer has the right to make a claim with the Fair Work Commission. That is, to decrease the redundancy pay that they owe the employee. This is a sad but completely legal reality that many redundant employees face. And there’s no shortage of employers who will try to game the system to ensure their redundant employee receives a reduced payout.
Salesperson has redundancy pay reduced after declining ludicrously bad redeployment offers
One such Fair Work Commission case that involved this scenario is Sales Link Australasia Pty Ltd v Mrs Peta Macourt . Sales Link Australia made a claim with the Fair Work Commission to reduce the redundancy pay of its former sales team leader, Peta Macourt.
Ms Macourt had been made redundant following an organizational restructuring. In fact, she had been made redundant due to an innovation she introduced to the company. Just prior to her redundancy, Ms Macourt had put in place a centralized help desk which streamlined processes across several teams. And as such, all team leader roles were made redundant. Ms Macourt, who had worked for Sales Link for seven years, was in charge of a small team of salespeople. And she was paid an annual salary of $95,000.
“I do not want to be anyone’s b*tch:” Ms Macourt declines role requiring 166-kilometre commute
After the organizational restructuring, Sales Link offered Ms Macourt two options for redeployment. One was at a client’s business. And the other within Sales Link. The first role offered was that of Independent Key Account Manager at client Beak & Johnson. While the role offered Ms Macourt the same pay and entitlements as her previous position, there were two glaring problems.
Firstly, it was a six to twelve month contract to cover for someone on maternity leave. Secondly, it would require Ms Macourt to commute two times per week to an office located 166 kilometers from her home. What’s more, Ms Macourt expressed to Sales Link that she didn’t have the requisite knowledge or experience for this role. And it required assisting the National Business Manager. This was a prospect that Sales Link claims Ms Macourt responded to by saying “I do not want to be anyone’s b*tch.”
Ms Macourt declines second, perhaps even worse redundancy redeployment offer
The second role offered to Ms Macourt was that of Sales Representative at Sales Link. But like her first offer, there were two problems with this one. Firstly, the position was a step down in terms of responsibilities compared to her previous role. And secondly, it was for a much lower salary. Ms Macourt said that the role was effectively a demotion. Not only for the two previous reasons. But also because she had previously supervised the role as team leader.
“Clearly a demotion:” The Fair Work Commission rules on the redundancy redeployment case
The task for the Fair Work Commission was to decide whether the conditions of the roles offered to Ms Macourt were no less favourable than her previous role. But after assessing both, it deemed that the redeployment roles were not acceptable alternative work. The Fair Work Commission said that there were “significant detrimental alterations” to the conditions of her former role.
First, the Fair Work Commission considered the Key Account Manager role at Beak & Johnson. It said that not only wasn’t it a permanent role, it was also very different from her previous role. Namely, because Ms Macourt had previously been in a leadership position and did not manage any key accounts.
Next, the Fair Work Commission considered the Sales Representative role at Sales Link. It deemed this role to be “clearly a demotion.” This was due not only to the significantly lower pay. But also, the type of work on offer. And, the junior nature of the role. Ultimately, the Fair Work Commission ruled that both offers were “not acceptable other employment.” And therefore, it ordered Sales Link to pay Ms Macourt her full redundancy pay.
Conclusion to Redundancies may soon be on the rise. What are your rights?
Now redundant, looking for a new job. Don’t dwell in the past. In this article, we’ve seen how dodgy employers attempt to make employees redundant for non-genuine reasons. And we’ve also seen how employers can seek to reduce redundancy pay. With so many employers like this out there, there’s no coincidence that redundancies disproportionality affect the most vulnerable and less advantaged people in society. This is a clear trend that we at A Whole New Approach have noticed in our work helping thousands of clients who have received redundancies.
The types of people who typically experience non-genuine redundancies includes:
- Employees on WorkCover.
- Employees who were made redundant the day they returned from a WorkCover injury.
- Pregnant women.
- Older employees.
- Employees who complain or exercise their workplace rights.
- Working mothers.
- Victims of on-going domestic violence.
The one exception to this, however, is that non-genuine redundancies also disproportionally affect higher paid employees.\
Conclusion to Redundancies may soon be on the rise. What are your rights?
If your redundancy wasn’t genuine, we can help For over 20 years, A Whole New Approach (we are not lawyers) has helped Australian workers fight for their workplace rights. If you feel that your employer didn’t follow the right steps when making you redundant, you could be eligible for a unfair dismissal or general protections claim. Be aware of the strict 21days to lodge a claim for compensation or reinstatement. (1 year to lodge a discrimination claim). Want to issue a claim against your employer? sacked for other reasons? probation period issues, workplace investigations, give us a call.
Call us today on 1800 333 666 for a free initial consultation to see if you’re eligible for an unfair dismissal application.