What is a 'genuine redundancy'?

There are several grounds on which an employer may dismiss an employee, including performance, misconduct and redundancy. For employers covered by the national system of employment laws, any redundancy must be a “genuine redundancy”, as defined under section 389 of the Fair Work Act. Essentially, this definition includes three elements which must each be fulfilled:

  • The position no longer needs to be performed by anyone. 
  • The requisite consultation was undertaken. 
  • The dismissed employee could not reasonably be redeployed elsewhere in the company (or associated entities).

If there is a genuine redundancy, through a jurisdictional objection, an employer can prevent an employee from bringing an unfair dismissal application.

The importance of establishing genuine redundancy was underscored in Maria Ranchod v Dog and Bone Holdings Pty Ltd [2021] FWC 6093. In this case, a former marketing director was purportedly made redundant as a result of a downturn caused by the COVID-19 pandemic, before filing an unfair dismissal application. While there was a downturn, Deputy President Ashbury found there were no changes in the operational requirements of the business - the marketing position was still needed. Instead, the COVID-19 downturn was used by the chief executive to “disguise” the marketing director’s dismissal, her being his ex-wife. 

On this basis, the jurisdictional objection was rejected. Continuing, Deputy President Ashbury found the marketing director was unfairly dismissed, awarding her $27,000 plus superannuation in compensation

Before considering a redundancy, employers should seek advice on their legislative obligations and measures for reducing risk.

Disclaimer: This summary is a guide only and is not legal advice. For more information, call ECA Legal Pty Ltd on (08) 6241 6129 or email ecalegal@ecawa.org.au