Business Restructure & Redundancy

Business Restructure & Redundancy

Business Restructure & Redundancy

If your business is considering undergoing a restructure or redundancy, MKI Legal Legal can assist you to get it done lawfully.

Redundancies occur if a business no longer requires a position to be reformed by anybody due to a change in technology, reduction in revenue, a closure, a merger or some sort of operational requirements.

If a redundancy is not done correctly, you can expose a business to an unfair dismissal claim, general protections claim or civil penalties for breaches of workplace laws.

Genuine Redundancy

In order to make a position lawfully redundant, the redundancy has to be genuine. There are three essential tests to satisfy this.

Position is no longer required

Firstly, the position is no longer required to be performed by anybody. This can occur in a variety of ways. For example, the business might have 10 cooks and it only really needs 8 cooks so it simply does not need the position of the 2 cooks.

Another way this can occur is if various roles are merged together. If a salesperson's responsibilities are distributed between a manager and the administration officer, then the salesperson position would no longer be required.

Redeployment opportunities

The second test is that there are no other jobs for the employee to perform (eg no other suitable alternative redeployment opportunities).

The business is obliged to check if there are other suitable positions within the employee's skills, qualifications and experience. If there are no suitable alternative positions, then this requirement is satisfied.

The business normally is required to offer this position to the employee. If an employee rejects a suitable alternative role, there might also be grounds for the business to apply to the Fair Work Commission to have the redundancy pay reduced by an appropriate amount (this can be reduced to zero).

Consultation requirements

The third requirement for a general redundancy is that the business has complied with its consultation requirements under a modern award or an enterprise bargaining agreement.

Businesses often get this part wrong. Modern awards and enterprise agreements usually set out very specific requirements in respect to consultation.

It normally requires the business to:

  • put forward all relevant facts to the employee
  • give an employee an opportunity to have their say regarding the redundancy</p>
  • consider the employee's input
  • put various matters in writing to the employee

All this has to occur before the final decision for redundancy is made.

If a business does not properly comply with their consultation requirements, then they breach the Fair Work Act, the award or the enterprise agreement - this can result in civil penalties against the business and any individuals who were involved in the breach.

Transfer of Business

Transfer of business can occur if a business is acquiring a new business or if it’s merging with another business.

There are also very specific rules that apply when an employee is being transferred from one business to another.

It’s recommended for a business to get legal advice in relation to understanding how entitlements carry over between the two entities. If a business gets the transfer of employees requirements wrong, then that could expose the business to fines and penalties.

Unable to afford the redundancy pay

If a business cannot afford redundancy pay, then there is an option to apply to the Fair Work Commission to seek to have the redundancy decreased (including to zero)

Notification Requirements

If a business is making more than 15 employees redundant, there are obligations to notify a Services Australia and the relevant union; a failure to do that can result in a breach penalty.

Redundancy pay

Redundancy pay is often calculated pursuant to section 119 of the Fair Work Act. However, if the business has a more generous redundancy scheme, then that will need to be paid to the employees.

How Can MKI Legal Help?

MKI Legal can assist your business to undertake the process of redundancy lawfully to minimise the chances of a claim being made by any employees or the Fair Work Ombudsman.

Employees often make claims arising from redundancy which can include alleging that the redundancy was not genuine, alleging that they were selected for redundancy due to breach of the general protections provisions, seeking penalties to be imposed against the business for failure to consult and many others. MKI Legal has experience in assisting businesses with these issues and we can help you defend any of these claims should they arise.