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21 Mar 11
Forced redundancies back on the table

The Local Government Workforce Transition Code of Practice 2007 (Code of Practice) took effect in August 2007 in order to assist with the transition of local government employees following amalgamations.

One significant restriction initiated by the Code of Practice was to maximise the job security of local government employees by preventing forced redundancies from occurring prior to 16 March 2011.

Now that the Code of Practice has expired, local governments are no longer prevented from proceeding with redundancies, whether on a voluntary basis or otherwise.

The fact that the Code of Practice is no longer in force does not mean that the floodgates are open and that redundancies can be effected without regard to legal requirements. When considering redundancies, there are a number of significant matters that local governments must take into account.

At law, a redundancy occurs when:

  • an employer no longer requires the position, as it is currently constituted, to be performed by the employee or any other employee
  • the decision to effect redundancies is not just due to the ordinary turnover of staff
  • no alternative employees are to be engaged to fill the redundant positions in the short term, and
  • the employee’s termination is not on account of any personal act or default of the employee, or for disciplinary reasons.

The circumstances in which a redundancy can arise and the entitlements that flow from a redundancy may also be affected by the terms of underpinning employment contracts, policies, awards, industrial instruments, legislation and, potentially, the past custom and practice observed by local governments.

While there will no doubt be some local governments that will need to consider forced redundancies as part of properly managing operational requirements, it is important to bear in mind that an incorrectly handled redundancy process gives rise to risks of unfair dismissal claims, workers’ compensation claims and industrial disputes.

The best practice approach to redundancies is to properly manage risks by developing a strategy that properly considers the legal requirements and is clear about:

  • what is changing and what the new structure is to be
  • why the change is taking place
  • which employees will be affected
  • how it will affect those employees
  • the criteria to be used to choose between employees potentially affected e.g. length of service, experience, skill set
  • attempts to identify suitable alternative employment and measures taken to minimise or avoid the redundancies
  • consultation requirements, including with unions
  • the employee’s entitlement to have a support person present at discussions, and
  • entitlements that will be received if the employee is terminated on the basis of redundancy, including job search entitlements, notice of termination, accrued but untaken leave entitlements and severance pay.

Focus covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. Focus is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.

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