19 February 2015 Redundancy... is it still a more convenient way of removing a difficult employee?

By Warwick Ryan, Partner


Removing staff that are not performing can be a protracted and convoluted process.  For a long time, employers have often seen redundancy as an avenue for side stepping the various disciplinary/counselling sessions/warnings that have to occur prior to an employee being terminated for poor performance.  

The beauty of the redundancy was that you could simply tell the employee that their position was no longer required and they were gone. 

If the employer consults with the affected staff member (where an award employee) and looks for any alternative roles internally, a genuine redundancy remains one of the exceptions to the unfair dismissal division under the Fair Work Act.

So, is it still really the 'simpler' option for removing staff?    

The short answer is 'yes'.  The basic position is that it is still open to the employers to make decisions about their organisations and which positions are required for their business' productive functioning.  

The concept of the redundancy is not that you are getting rid of a particular individual but that you have decided that that particular role is no longer required (and thus the individual is terminated).  The role may no longer be required because either:

  1. you have outsourced it to a third party and/or ceased to require those duties to be done by anyone in the company; or
  2. managed to restructure the role in a way that the duties attached to that position were shared out amongst other remaining staff members. 

In either situation, the position ceases and because the position is no longer required the employee is terminated.
The first option is generally easy to discern, but the second situation is less clear.

How many duties need to be taken away before a job is – in effect – a different role? 

This question was recently considered by the Court of Appeal in New South Wales (UGL Rail Services Pty Limited v Janik NSWCA 19 December 2014).  It arose where an employee was terminated and another employee then assumed a role with similar (but not the same) duties.  The terminated employee claimed his termination was a redundancy

In the leading decision in that case, the judge expressed the view that a redundancy arises where:

"...the duties and responsibilities of the position are so substantially altered that is largely stripped of its functions". 

It is a question of degree.  The judge looked very closely at the position description and the actual duties carried out by the employee that had been terminated and the person that (after the former's termination) occupied a similar position.  The judge found that the key responsibilities of both the terminated worker and his 'successor' were very similar and - therefore – it was not a sufficiently different role as to classify the termination as a redundancy.  

Redundancy is still an important management prerogative to ensure a business viability and productivity but care still needs to be taken with the process.

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This article is not legal advice and the views and comments are of a general nature only. This article is not to be relied upon in substitution for detailed legal advice.

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