Redun­dan­cy… is it still a more con­ve­nient way of remov­ing a dif­fi­cult employee?

In Brief

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.