Beware redundancy criteria based on cultural values

06 September 2012 7:28am

Assessing employees for redundancy on the basis of "subjective" selection criteria requires extra care to avoid adverse action and other claims, warns Freehills senior associate Natalie Spark.

Spark covers the key considerations for developing selection criteria in a webcast now available on HRD Plus (gold subscribers). She notes that when employers include more amorphous concepts in their criteria, such as "team work" or "ability to get along with management", they expose themselves to greater risks.

"Of course an employer is well within its rights to seek to retain employees who are most aligned to their business," she says. But while these criteria might look "neutral", they can sometimes be discriminatory.

For example, says Spark, "shop stewards who vigorously agitate their claims and employees' rights - and do so lawfully, because that's their workplace right - tend to score lower on those criteria because they get in the way of management by being confrontational".

That creates a big area of risk for discrimination and adverse actions claims, she says.

Other areas of difficulty include where employees have been out of the workforce for some time, or are on modified duties. "What are you assessing them on? Their ability to perform their modified duties, or their role? Be mindful of that."

Attendance criteria can be useful - "You're within your rights to choose employees who come to work on time and finish their breaks on time and notify you of absences from work in accordance with your agreement" - but Spark warns against implementing criteria that penalise employees for taking leave they're entitled to, such as sick, carer's or parental leave.

Spark says it isn't critical to have previously measured performance against the selection criteria, but it's certainly preferable.

If an employee disputes their low score and claims the reason for it is, for example, a discriminatory one, "if you can't document [the real reason] then it's much more difficult for you to disprove that".

"Ideally, your assessment panel would have the employee files available to them. Of course there might be disputation about what you can take into account - if you go back to a warning letter that was received 12 years ago the union might have views about that... - but ideally you have documented it somewhere.

"Documents make great evidence - much better than having someone in the witness box verbally attest to what happened."

Spark recommends that employers be aware of their workforce demographics and try to ensure these are aligned with redundancy decisions.

"It's a good little tip to do an analysis of your workforce if you are faced with this situation," she says.

This might include calculating the number of women; Indigenous employees; union representatives; workers who speak English as a second language; and those who are on modified duties, for example.

"Ideally, once you do that same demographic analysis of the people made redundant, they match up."

Employee/union involvement

When planning how to implement redundancies, there is no "right answer" about the extent to which an employer should engage employees and their unions, Spark says.

The first thing to consider is whether any agreement in place is prescriptive about consultation, she says.

Next, an employer must weigh up whether to say, "This is what's happening with the business; unfortunately we're making people redundant and this is the proposed timing", or go further and say: "This is how many people; this is the selection criteria we're using; this is what we're going to pay employees."

Generally speaking, Spark says, "it's good practice to have transparency", but "on the other side, it can lead to industrial disputation".

Asking unions for input about proposed selection criteria can be problematic if the employer doesn't ultimately use their feedback, she notes.

"The risk with that is you might have a particularly broad dispute settlement procedure in your agreement," Spark says. Often, dispute clauses will set out a procedure for resolving "any matter arising in the workplace", and this procedure ultimately leads to Fair Work Australia.

"That's so broad it can include changing from Tim Tams to Scotch Finger Biscuits in the canteen, and can include a dispute about the selection criteria that you propose to use. The risk of that is heightened when you've got a 'status quo' type clause in your agreement. It will say, 'Until this dispute is resolved, work shall continue as normal and the status quo will be maintained'.

"The effect of those sorts of clauses is effectively like a quasi-injunction."

This means that if unions commence the dispute process, by the time it is dealt with internally, and then by Fair Work Australia for conciliation then arbitration, employers might find themselves in a position where "four months have elapsed and you're carrying all your employees and you can't manage your business".

On the positive side, involving employees in their selection criteria - for example by discussing initial thoughts on where they are likely to score, and asking for their input or response to that - can assist in satisfying a tribunal at a later stage that the employer has been procedurally fair in the termination (when facing an unfair dismissal claim, for example).

"The downside of course is that it can be really time consuming and can lead to disputation as well. So it depends on your process and what you're doing in the business and your particular circumstances - but it's something to keep in mind."

Spark's presentation covers how to manage the redundancy process; unfair dismissal, discrimination and general protections risks; consultation and redeployment requirements; selection criteria and more. Click here to watch, or here to upgrade your subscription.

Comments closed

premium content

Webcast: Managing redundancies under the Fair Work Act
Audio: Managing redundancy under the Fair Work Act (Q&A)
How to develop redundancy selection criteria

Redundancies under Fair Work "a balancing act"
Redundancy do's and don'ts

Latest headlines

Advanced search

search for	from date

	to date