Beware redundancy criteria based on cultural values
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.
Employee/union involvementWhen 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.