By Isaac Chan
Redundancies are not uncommon for business, big or small, who are undertaking operational changes to the business such as downsizing or restructure; or selling the business.
A variety of factors, including market and economic conditions, can impose volatile conditions on businesses; meaning they need to be adaptable and able to execute rapid or frequent change. The impact of such rapid or frequent change may result in changes to the capabilities or resources a business needs to remain competitive and viable.
This scenario can lead to a business requiring capabilities or resources to complete duties or functions that were previously considered redundant or no longer required.
This situation raises the question: “how long after a role has been declared redundant can I rehire people to perform those duties and/or functions?”
Is the role genuinely redundant?
If you have considered making a role redundant to avoid dealing with performance or conduct issues, whether this is because you do not want to humiliate your employee, you do not feel that performance improvement is possible, or you do not feel confident in your own ability to have such difficult conversations; you would not have been the first person to do so. However, declaring that a role is ‘redundant’ means that you no longer require the duties, functions and responsibilities to be carried out by any other person employed by the company.
If the person is the issue and the role is not genuinely redundant, the discomfort of having those difficult conversations is but a pin prick to the skin compared to the discomfort inflicted by the time, costs and damage that defending an unfair dismissal or general protections claim could have on your business.
Genuine Redundancy is defined under the Fair Work Act 2009 as meeting the following criteria:
- the employee’s role is no longer required to be performed by anyone employed by the business due to changes in the operational requirements of the business; AND
- there are no reasonable opportunities for the affected employee to be redeployed to another role within the business or an associated entity; AND
- the employee was consulted in line with any Modern Award or Enterprise Agreement requirement to consult employee’s about major workplace change.
If you can comfortably say that you have met ALL of this criteria then the redundancy would likely be considered a genuine redundancy.
So, when can I re-hire…?
There is no statutory or recommended timeframe to simply answer this question. However, there are a few things to consider before you do make a decision…
An employee has 21 days following the date of termination to lodge an unfair dismissal claim, however, claims submitted after this period may be granted an extension by the Fair Work Commission (FWC) in extenuating circumstances that need not be related to the termination or employment.
If you do receive an unfair dismissal claim, you will be required to demonstrate that the redundancy was genuine and that the new work requirements were not known or foreseeable at the time the termination decision was made.
In some industries, the business workforce requirements are entirely dependent on the tenders, jobs or projects won to warrant the ongoing need for resources. In this situation, an employer would need to demonstrate that there was genuinely no further requirement for the role and that there was no knowledge of any future work that may require the role to be performed.
So, in summary, my recommendation is to consider how far in advance the business is confidently able to forecast its resource requirements and use that as a benchmark for your policy around when to re-hire; or alternatively, make sure you can demonstrate that the role was no longer required and there new requirement for the same role was unexpected and unknown at the time the decision was made to terminate the employee.
What if I re-hire the same person?
In contrast, if you are considering re-hiring the same person after making that person redundant there may be implications on personal/carers leave, long service leave and taxation depending on the period of time which has lapsed between the termination and re-commencement of employment.
A question that often comes up is “what if I offer the role back to the same person?” Now while it can seem like a noble gesture and depending on the circumstances that the employee left the business it can be met with gratitude. The risk with this however still remains if it’s relatively soon after the termination and can even be used as ammunition to question whether their termination was a genuine redundancy in the first place if they are being offered their job back after a short period of time.
Nicole Visedo, a Senior Workplace Relations Consultant at HR Assured who has a wealth of experience with redundancies had this to say about rehiring after making an employee redundant: “When assessing whether or not there is risk in re-hiring for a role that was previously deemed redundant, consider the case for change stacks up. What has changed (since the termination of the previous incumbent) that warrants the role, the function or the responsibilities to be required again. If the case is genuine and you have documented your decision making process, you should proceed to re-hire to fulfill your business needs”
Redundancy is a complex process within itself and when you add rehiring into the mix it can make it seem almost impossible but if you assess the situation, consider the needs of the business and follow the points above you’ll be on track to make the best decisions for your business.
Isaac Chan is an experienced workplace relations consultant at FCB Group and HR Assured. Isaac regularly handles complex workplace issues for all kinds of businesses, from start-ups to enterprise-level.