Businesses seeking to undertake redundancy processes for staff due to economic downturn and lack of work associated with the COVID-19 pandemic must continue to meet their consultation obligations under any relevant modern award applying to their employees. While many businesses are experiencing unprecedented circumstances, the Fair Work Commission has set a clear reminder that businesses must comply with consultant obligations before making decisions regarding redundancies.

Auscript, the Federal Court’s transcription service, has been criticised for making ‘hollow’ consultation promises to genuinely consider alternatives to redundancy, when it had, in fact, concealed its decision to make 58 roles redundant. Auscript had failed to undertake the correct consultation process in line with its Enterprise Agreement and made decisions regarding redundancies before any real opportunity for the Australian Services Union (ASU), its members or employees could make provide any feedback or provide any information which would influence Auscript’s decision.

While Auscript had experienced a loss of up to 60 per cent of its work as a result of the COVID-19 pandemic, it showed a disregard for their legal obligation to engage in genuine consultation and did not consider other options to mitigate negative outcomes, such as the utilisation of leave hours, leave without pay, career breaks or other support programs.

As a result of Auscript’s failure to consult with its employees or the ASU as required by its Enterprise Agreement, the Fair Work Commission has ordered the company to refrain from compulsory redundancies until it had met with employees more than once to explore options.

What should businesses be doing?

Businesses should consider implementing measures that limit the impact on employees, including the announcement by the Federal Government of the JobKeeper payment and other plans to support employees and employers, before proceeding with redundancies. This may include negotiating with employees to temporarily alter their working conditions throughout this period. This may include a reduction of hours or salary for a period of time.

Where the business is in a position that it can demonstrate that it no longer requires a role to be performed, that is, it is a genuine redundancy, and no alternative arrangements can be made, it may consider proceeding with a redundancy process.

What does a redundancy process look like?

Businesses need to refer to the consultation process outlined within any Award or Enterprise Agreement regarding major workplace change. Often the process will include the following steps:

  • giving notice of the changes to employees and their representatives; and
  • discuss with the employees and their representatives the introduction of the changes, and their likely impact on the employees and measures to avoid or reduce the adverse effects of the changes on employees; and
  • considering any feedback or matters raised by the employees about the changes; and
  • commence discussions as soon as practicable after a definite decision has been made.

Failure to follow the correct consultation process is a breach of an employer’s obligations and may carry significant penalties. Additionally, where an employer fails to undertake a consultation process, this may give rise to an unfair dismissal claim.

If you have any further queries, contact the team at enableHR.