Redundancies in Small Business

At some point in running a small business you may have to cut costs through redundancies.  This is a very painful process, but if the correct procedures are performed, that pain can be limited.

The Small Business Fair Dismissal Code

If you run a small business of less than 15 employees, then the Small Business Fair Dismissal Code will apply to your business.  This is determined by a simple head count of all employees including casual employees who are employed on a regular and systematic basis.

If the Code applies to your business, then employees cannot make a claim for unfair dismissal in the first 12 months following their engagement.  Small business employees also need to have worked as a full time, part time or regular casual employee for at least 12 months to qualify for unfair dismissal.

Genuine Redundancy?

If an employee has worked for more than 12 months you will need to consider the requirements of a ‘genuine’ redundancy to protect yourself from an unfair dismissal application.  A redundancy will be ‘genuine’ if:

1. the employee is no longer required to perform that role because of operational requirements; and
2. the employer has complied with any obligation to consult about the redundancy which might exist in a modern award or enterprise agreement.

However, a redundancy will not be ‘genuine’ if it would have been reasonable in all the circumstances for the employee to be redeployed either within the employer’s enterprise or the associated entity of the employer.  There are a number of factors which need to be considered when assessing whether redeployment is reasonable:

• the nature of the new role;
• whether the employee is suitably qualified to perform the new role;
• the distance the employee must travel to the new role;
• the remuneration offered to the employee.

The law relating to redundancies is a tricky, fact specific area.  Our commercial litigation team regularly deals in employment law, particularly regarding restructuring of workforces.  We are available to answer all your employment law questions.

Please do not hesitate to contact our office on (07) 4963 2000 or via our online contact form should you have any queries.