The harsh reality of the past three years is that numerous Aussie firms have faced the challenge of making redundant some or all of their employees. Also, the Fair Work Commission (FWC) has reported thousands of unfair dismissal claims in 2021 and 2022, suggesting a continuation of this trend toward the end of 2023.
Knowing that, it’s hard not to ask: How to avoid unfair dismissal claims during redundancy processes and ensure your company doesn’t become a part of the above statistics?
As HR and employment experts, we’ve prepared an overview of crucial aspects of unfair dismissal and redundancy, along with valuable tips to help you protect your business from legal disputes. Let’s dive in.
Crucial aspects of unfair dismissal and redundancy
To minimize the risk of facing an unfair dismissal claim during redundancy processes, it’s essential to understand what each of these terms entails.
Unfair dismissal refers to the unlawful and unjustified termination of an employee. To be eligible to file an unfair dismissal claim, employees must meet specific criteria set out in the Fair Work Act 2009 (the Act). (See this article for a detailed description of the unfair dismissal criteria). One of them specifies that employees can’t file an unfair dismissal claim if they were dismissed due to a genuine redundancy.
Genuine redundancy occurs when an employer no longer needs someone to fill a specific role, often due to company insolvency or bankruptcy. Genuine redundancies also come with precise criteria and entail obligations such as redundancy consultation, notice of termination, and redundancy payments.
Put simply, to avoid unfair dismissal claims, you must ensure that redundancies are genuine.
Expert tips on how to avoid unfair dismissal during redundancies
Here are our top three tips on preventing unfair dismissal claims during your redundancy processes.
#1 Fulfill genuine redundancy obligations
As previously mentioned, for redundancy to be considered genuine and, thus, not qualify as unfair dismissal, your company must fulfil the following obligations:
- Redundancy consultation: Have meaningful discussions with affected employees to explore potential redundancy alternatives, gather their input, and ensure they clearly understand the redundancy process.
- Notice of termination: Provide employees with proper notice of termination. This notice should align with the minimum redundancy notice periods established by the Act and comply with any notice provisions specified in employment contracts.
- Redundancy payment: Calculate the financial compensation for affected employees. You can use the Fair Work Ombudsman’s redundancy pay calculator and research the relevant awards to determine the specific criteria that apply to your situation.
Adopting a strategic approach is the best way to ensure compliance with these obligations. You can find assistance in our redundancy guide and the article covering key points in the redundancy process.
#2 Maintain a written record of the redundancy process
Redundancies are a sensitive process, and it’s vital to document them thoroughly from the start. Be sure to take notes during every redundancy-related meeting and redundancy consultation. These notes should serve as evidence of the fairness of the procedure and demonstrate valid reasons behind decisions.
Maintaining organized documentation is crucial not only during redundancies but at all times. Keeping track of employment agreements, policies, and any changes can be your lifeline in case of legal disputes.
#3 Foster fair and supportive redundancy procedures
Ensuring that your HR team and managers receive continuous training addressing redundancy situations’ legal and emotional aspects is crucial.
For example, employees may experience intense emotions like sadness, anger, or frustration during redundancy consultations. Well-trained professionals would be equipped to follow a redundancy consultation checklist meticulously and cover all essential topics while maintaining a composed and supportive approach toward the affected employees.
Your approach to redundancies and how you treat employees can profoundly influence your employer brand. And if proven discriminatory or offensive, your actions can also lead to unfair dismissal claims.
Minimize legal claim risks with professional HR support
Unfair dismissal claims can harm your company’s reputation and consume time, finances, and energy. These factors underscore the importance of seeking expert support to ensure your redundancy process unfolds lawfully and with minimized legal claim risks.
At Fresh HR Insights, we understand the complexities of redundancy. That’s why we’ve created a comprehensive manual on redundancy implementation, helping you follow the necessary steps, avoid unfair dismissal claims, and carry out redundancies as smoothly as possible.