The Importance of Consulting and Understanding Redeployment

Consulting with your employees in relation to any changes to their terms and conditions of employment is not only a matter of compliance – it also makes good sense.

When the consultation is related to a review of business operations where there are potential redundancies, understanding what redeployment opportunities might look like is critical.

In this week’s Akyra blog, we explore the case for consultation, and outline some key considerations regarding redundancies and redeployment.

The Case for Consultation

There are five reasons why consultation makes good sense. These include:

1. Better decision making: When employers consult with their staff, they gain valuable insights and perspectives. Employees can provide feedback, share their experiences, and contribute ideas. This collaborative approach leads to better decision-making because it considers a wider range of viewpoints.
2. Easier change implementation: In times of change (e.g. restructuring, new policies, or shifts in work processes), consultation helps ease the transition. Employees who have been involved in the planning process are more likely to accept and adapt to changes; reducing anxiety and resistance resulting in a smoother implementation.
3. Improved business performance: Effective consultation leads to improved business performance during change. When misunderstandings, rumours or disputes are minimised through open communication, time is not wasted resolving conflicts. Engaged employees who feel heard are more likely to perform well.
4. Positive workplace culture: A consultative approach fosters a positive workplace culture. Employees appreciate being part of the decision-making process, which enhances their sense of belonging and commitment to the organization.
5. Resilient Workforce: Engaging employees through consultation builds a resilient workforce. When employees understand the reasons behind decisions and feel included, they are better equipped to cope with organizational changes and challenges.

Remember, consultation doesn’t mean employees make the final decisions; it does mean considering their views when employers make the business decisions.

When will a dismissal be a “genuine redundancy” under the Fair Work Act?

In considering whether a dismissal is a “genuine redundancy” under section 389 of the Fair Work Act, the Commission must be satisfied that:

• the employee’s role is no longer required due to changes in the operational requirements of the business;
• the employer has complied with its obligation to consult with affected employees under any applicable modern award or enterprise agreement;
• it was not “reasonable in all the circumstances” to redeploy the employee to another role within the employer’s own business or any entity associated with the employer.

A recent 2022 Fair Work decision (Helensburgh Coal) ultimately turned on the last of these criteria. The full Federal Court found it was “reasonable in all the circumstances” for Helensburgh to reduce its reliance on external service providers and redeploy its affected employees to positions currently occupied by contractors. The Court held that “reasonable in all the circumstances” requires analysis of what an employer could have done apart from dismissing the employee. The fact that redeployment was made more difficult by the need to retrain employees did not act as a barrier to redeployment.

What do redeployment opportunities look like?

Redeployment opportunities, as defined in the Fair Work Act 2009, refer to the requirement for employers to offer employees (whose original roles have been made redundant) reasonable opportunities for redeployment within either the existing business or an associated entity of the employer.

Here are the key points regarding redeployment:

1. Reasonable in the circumstances: Before dismissing an employee due to redundancy, employers must consider whether it is reasonable to redeploy the employee to another position within the business or an associated entity. The reasonableness of redeployment depends on various factors – e.g. suitable positions, employee’s qualifications, skills, experience and the offered remuneration.
2. Alternative job or position: Employers must determine whether there is an alternative job, position or other work within their enterprise or an associated entity where the dismissed employee could reasonably be redeployed.
3. Associated entities: Another consideration for employers is whether redeployment to an associated entity is reasonable.

In summary, the Fair Work Act emphasises the importance of exploring redeployment options before making an employee redundant, identifying whether or not there are reasonable opportunities within the organisation or its associated entities.

What happens if redeployment is not possible?

If suitable redeployment is not possible after considering all reasonable options, the employer can then proceed with the redundancy process.

Here are the typical steps when redeployment is not feasible:

1. Redundancy notice: The employer provides the employee with written notice of redundancy. The notice period depends on the employee’s length of service and is outlined in the Fair Work Act. It ensures employees have time to prepare for the termination of their employment or it is paid as wages in lieu of notice.
2. Redundancy pay: Generally, where employers do not fit the Small Business Code, employees who have been with the organisation for a certain period (usually more than 12 months) are entitled to redundancy pay. The amount of redundancy pay depends on their length of service and the terms of their employment contract. The Fair Work Act specifies the minimum redundancy pay rates.
3. Finalising employment: After the notice period, the employee’s employment is terminated. They receive their redundancy pay, any outstanding entitlements (e.g. accrued annual and/or long service leave), and any other relevant payments.
4. Support services: Employers may offer support services to affected employees (e.g. career counselling, job search assistance or referrals to employment agencies). These services can help employees transition to new employment opportunities.
5. Legal considerations: Employers must ensure the redundancy process complies with legal requirements, including consultation obligations and procedural fairness. Failure to do so may result in legal claims for unfair dismissal or other breaches of employment law.

While redeployment is ideal, sometimes it’s not feasible due to operational constraints or other reasons. In these circumstances, redundancy becomes necessary.

Key Takeaways