Redundancy is an unfortunate part of operating a business. Redundancy may arise as a result of a restructure, reorientation of business director or economic downturn. Discussions regarding redundancy can be particularly difficult, especially where certain tasks of a redundant role remain and are set to be redistributed. When such a situation arises employees may be of the perception that their role is still required which may make the process of discussing redundancy particularly difficult.
Under the Fair Work Act 2009 (Cth) (the Act), a business cannot simply make an employee redundant without cause. The redundancy must be genuine and the employer must comply with their obligations under the Act and any employment agreement. In assessing whether a redundancy is genuine regard is to be had to s 389 under which there are three general criteria:
- The employer must no longer require the employee’s job to be performed by anyone because of changes in operational requirements;
- The employer must comply with any consultation obligations it has under a modern award or enterprise agreement; and
- Redeployment within the employer’s business or an associated entity must not be reasonable in the circumstances.
An example of the assessment of redundancy procedures by the Fair Work Commission (FWC) is the case of Broudou v Eurolinx Pty Ltd  FWC 4469. In this case a Technical Service Manager challenged his redundancy alleging that it was an unfair dismissal on the basis that the redundancy was not genuine. The employee claimed that as duties of his role still existed within the business, as demonstrated by the redistribution of tasks to other employees, there could be no redundancy.
The employer responded that the redundancy was a result of a downturn in business, a 15% reduction in sales and a 15.7% reduction in service activity, which necessitated a reorganisation of the business. As a result, the employee’s duties were distributed amongst four other employees rendering the technical service manager role redundant. The basis for this decision was nothing more than ensuring the sustainability of the business in face of the commercial challenges.
Deputy President Boyce held that s 389 is not concerned with whether duties survive, it is concerned with whether the job performed by the employee exists. Whilst a job is “a collection of functions, duties and responsibilities entrusted, as part of the scheme of the employers’ organisation, to a particular employee”, where a redistribution results in no continuing need for someone to perform a job, that job will not be required by the employer.
The Deputy President stated:
The law more-or-less permits an employer to structure their business as they see fit. In this instance, the Fair Work Commission can take no recourse against what is clearly within the bounds of managerial discretion.On this basis, and in the absence of evidence that the employer did not comply with any obligations regarding redundancy or that there were reasonable redeployment or retrenchment options, the Deputy President concluded that the redundancy was genuine.