Steps to take in a restructure/redundancy process
Thursday, 23 February 2023
Many businesses are finding themselves having to downsize, restructure, or offer a redundancy process to existing staff. It can be an exhaustive and tedious process to ensure everything is done correctly and abiding by applicable workplace laws.
Here are the following steps that apply in a restructure/redundancy process.
- The practice should prepare a written business case which justifies why the restructure is required or the employee’s position is no longer required. This business case is for practice purposes in case it is needed in the future to explain the reasons for redundancy. The Fair Work Commission has further information on this topic.
It is important to ensure that there are sound business reasons for a restructure or redundancy, and it is not simply to terminate the employment of a troublesome employee. Be mindful that the practice’s business case may ultimately be discoverable (i.e. required to be handed over by the practice) in the event of a legal dispute.
- If there are a number of employees performing the same role but not all positions are redundant (e.g. you currently have three receptionists and wish to reduce that to two receptionists), the practice will need a “selection for redundancy process” that is based on fair and transparent criteria. You cannot simply appoint one of the employees to the new role.
The Fair Work Commission has some useful information about selection for redundancy processes.
- The practice will need to consult with the affected employees about the redundancy in accordance with clause 34 of the Health Professionals and Support Services Award 2020 (for reception and admin staff) (for reception and admin staff) and clause 29 of the Nurses Award 2010 (for nursing staff).
The Fair Work Commission has provided information about consultation requirements. There are a number of recent decisions about consultation. The Fair Work Commission expects genuine consultation about the issues, not just cursory consultation.
The obligation to consult extends to employees being considered for redundancy who are not currently at work (such as those on parental leave, long service leave or extended sick leave).
- The practice will need to consider whether the employee can be redeployed to another role within all related entities – see Fair Work Act and guidance.
- If the employee’s position is redundant, the practice will need to provide notice and redundancy entitlements in accordance with the employee’s contract of employment or the National Employment Standards in the Fair Work Act 2009 (Cth), whichever provides for a more generous entitlement. If the contract of employment is silent about these issues, the practice will need to provide:
- Notice or payment in lieu of notice.
- Redundancy pay (unless the employer is a small business owner, that is they have less than 15 employees).
- The termination of the employee’s employment must be confirmed in writing.
- The practice will need to pay out accrued but untaken annual leave entitlements.
- The requirements for paying out accrued but untaken long service leave entitlements on termination of employment vary from state to state. The practice should consider the relevant state or territory requirements.
- If a practice has decided to dismiss 15 or more employees due to redundancy, the practice must notify Centrelink about the proposed dismissals. Services Australia has information on redundancy for employers on its website.
- The practice can provide a statement of service to relevant employees. This should be an objective statement about their employment dates, position and duties.
- The practice should provide each affected employee with a separation certificate.