By Mark Cox, Director and Joanna Knoth, Senior Associate
Current economic conditions and industrial changes in Western Australia are putting strain on some businesses.
In order to survive, many businesses have to restructure their workplace. This often results in reducing surplus assets, addressing inefficiencies, and cutting or removing shifts. The redundancies that result from this process present a significant legal risk to employers.
The last thing you need to deal with during a cost-cutting operation is a costly legal case being brought against you. It’s important to consult an employment lawyer to mitigate this risk.
An employee’s position is made redundant when an employer no longer requires that job to be performed by anyone due to operational changes. Some employees are entitled to be consulted and to be paid redundancy pay when they have been made redundant. It’s important to understand the laws around redundancies to ensure you comply with your legal obligations and avoid damaging penalties.
Industrial instruments such as awards, employment contracts or collective agreements can provide employees with a right to receive redundancy pay. All employees covered by the national system of industrial relations are entitled to redundancy pay, as it forms one of the National Employment Standards.
Redundancy entitlements may differ if your organisation falls under the state system or if employees are covered by a modern award or enterprise agreement.
To be eligible for redundancy pay, the employee must have completed at least 12 months of continuous service with their employer and their employer must have more that 14 employees. The longer the employee worked in the service of the employer, the more redundancy pay they are entitled to, ranging from 4 weeks of pay to 16 weeks of pay.
Redundant employees will also be entitled to notice of termination and may also be entitled to other payments such as accrued annual leave and unpaid wages. Casual employees, probationary employees, apprentices, trainees, fixed contract employees and employees terminated for serious misconduct are not entitled to redundancy pay.
Employees who are made redundant cannot make an unfair dismissal claim unless they can prove it was not a genuine redundancy or that they were not fairly selected for redundancy. This makes it important to understand redundancy law and follow a correct and well-documented procedure.
Business Restructuring Procedure
Since business restructures are driven by market demands and economic conditions, operational and financial issues can dominate executive thinking. It’s important to consider HR legal issues early on to avoid problems later down the track.
Employers must meet their required consultation and notification obligations to their employees. This should involve informing affected employees and listening to their views. Explore every possible alternative employment option for affected employees and ensure that you plan and document the redundancy process. Remember that redundancy is about the position, not the person.
Every organisation’s restructuring process is different. A “one size fits all” approach won’t work well. An employment lawyer can provide advice and a tailored service that provides an ideal procedure for restructuring your business.
Contact our team of employment lawyers if you need legal advice or assistance with business restructuring and redundancy in Western Australia. Our workplace lawyers have extensive experience in HR legal issues and providing HR legal advice. MDC Legal also provides fixed fees and a no obligation initial consultation.