Genuine Redundancy and the JobKeeper scheme in Australia

If an employee is made redundant, and that employee is dismissed as a result of the redundancy, the employee cannot sue their employer for unfair dismissal if the redundancy was a “genuine redundancy”.

There are a number of reasons a job within a business may become redundant. This may include:

• a downturn in work (for example, there is not sufficient work to justify the position); or
• a restructuring of the business (for example, the position is outsourced as a cost-saving measure).

What is Genuine Redundancy?

A genuine redundancy is one which meets the following criteria:

1. The employer no longer requires the employee’s job to be performed by anyone because of changes in the operational requirements of the employer’s business.

First, a distinction is generally drawn between an employee’s job and an employee’s duties.

Generally, an employee’s job constitutes the collection of duties that they perform. However, the fact that the employee’s duties are still required to be performed, either by:

• other employees of the business; or
• outsourced to independent contractors,

does not mean that the employer still requires the employee’s job to be performed.

2. If a Modern Award or Enterprise Agreement applies to the employment, the employer must have complied with any obligations to consult about the redundancy.

Most Modern Awards contain obligations in relation to consultation about major workplace changes.

Generally, an employer is required to:

• give notice of changes to employees;
• discuss the changes with employees; and
• provide written information to the employees about these changes.

These consultation obligations are relevant if the employer determines to make redundancies (especially where redundancies will lead to termination of employment).

3. It was not reasonable in all the circumstances for the employee to be redeployed within the employer’s business, or the business of an associated entity of the employer.

In determining the reasonableness of redeployment, things to consider include:

• the nature of other work available;
• whether the employee has the requisite qualifications; and
• whether the position is appropriate for the employee’s skills and experience.

How are Genuine Redundancies and JobKeeper Payment affected during the COVID-19 pandemic?

The current pandemic has a significant impact on the Australian economy, as governments force businesses to close their doors and people’s spending habits change. Most businesses affected by the economic impact of COVID-19 would have considered whether to make redundancies.

The principles applying to genuine redundancies remain.

Employers should, however, ensure they thoroughly consider whether redeployment is suitable, especially in circumstances where the employer is eligible to receive JobKeeper subsidies.

The JobKeeper Payment scheme is intended to support Australian businesses and employees affected by the significant economic impact caused by COVID-19, by subsidising employee wages. Further, if an employer is eligible to receive subsidies under the scheme, new provisions of the Fair Work Act 2009 apply, including:

• enable employers to give employees directions in relation to standing down an employee;
• reduce their hours or days of work;
• change that employee’s usual duties; and
• change their location of work.

Our Thoughts

Employers who are eligible under the JobKeeper Payment scheme may redeploy their employees and minimise the cost of maintaining a workforce, without the need to make redundancies. It would be reasonable to expect an eligible employer to redeploy an employee rather than dismiss that employee.

However, in some instances, the dismissal of an eligible employee by an eligible employer may not amount to a case of genuine redundancy.

How can DSA Law help?

If you require legal advice about redundancies and your rights as an employer or employee under the JobKeeper Payment scheme, please Contact Us or one of the Employment Lawyers at DSA Law on (03) 8595 9580 so we can assist you.

[1] Fair Work Act 2009 (Cth) s 389.

[2] Fair Work Act 2009 (Cth) s 389(1)(a).

[3] Fair Work Act 2009 (Cth) s 389(1)(b).

[4] Fair Work Act 2009 (Cth) s 389(2).

[5] Coronavirus Economic Response Package (Payments and Benefits) Amendment Rules (No.2) 2020.

[6] Fair Work Act 2009 (Cth) s 789GF.

[7] Fair Work Act 2009 (Cth) s 789GDC.

[8] Fair Work Act 2009 (Cth) s 789GE.

[9] Fair Work Act 2009 (Cth) s 789GF.