Another round of job cuts is likely imminent with JobKeeper 1.0 having come to an end on Sunday. Letting staff go is never easy, but during the midst of this global pandemic it may be necessary for many businesses trying to stay afloat. Although making an employee redundant is never entirely without risk, being alert to the legal requirements is the first step to avoiding a claim.
Yesterday, 27 September, marked the end of the Federal Government’s original JobKeeper wage subsidy scheme under which eligible employers received $1500 per fortnight in respect of their eligible employees.
The first phase of JobKeeper 2.0, that commences on today, will now see eligible employers receiving either $1200 or $700 per fortnight depending on the average number of hours worked by the eligible employee. These amounts will be further reduced during the second stage of JobKeeper 2.0, which begins in January 2021. It is, therefore, likely that some businesses will find themselves grappling with their labour costs.
Redundancies are a typical course of action for businesses who need to cut staff costs. However, now, more so than ever, employees are challenging redundancies. Our advice: be prepared.
An employee’s position is redundant if the employer no longer requires that position to be performed by anyone because of changes in the operational requirements of the business.
But, employers need to ensure that there is a real and objective reason for eliminating a person’s position. While it may seem like an apt opportunity to rid the business of a problematic employee, this may result in the employee bringing one of a number of claims against the business.
Most employers have an obligation to seek redeployment opportunities before terminating an employee on the basis of redundancy. Those employers must consider whether there are any other roles the employee could perform within their enterprise, or an associated entity’s enterprise, before terminating the employment.
Consultation is usually a prerequisite to redundancy for award and enterprise agreement covered employees. A failure to consult with such an employee could render the redundancy unfair, in which case the employee may be entitled to compensation. Consultation requires an employer to notify the employee that their position is at risk of redundancy and that this could result in their termination, to discuss with the employee the steps the employer has taken to avoid the redundancy and to consider any suggestions the employee has in relation to the redundancy and proposed termination, including how it could be avoided.
When terminating an employee on the basis of redundancy, notice of the termination, or a payment in lieu of that notice period, must be provided in accordance with statutory or contractual minimums.
Under the Fair Work Act, employees are entitled to up to 16 weeks’ redundancy pay, depending on their length of service. Small businesses (those with fewer than 15 employees, including regular and systematic casuals) are excused from paying redundancy pay, and some cash-strapped employers may apply to pay a reduced amount (or nothing) if they can show they do not have the capacity to pay.
Some businesses will have their own redundancy schemes entitling the employee to additional benefits, which the employer must adhere to.
While casual employees typically do not have access to any redundancy benefits, they too can bring a general protections or discrimination claim, or in some cases an unfair dismissal claim, if their termination is for an unlawful reason, or is considered harsh, unjust or unreasonable.
Erin Kidd, Special Counsel and Liliana Freeman, Employment Group Lawyer, McCabe Curwood