• The Rules of Redundancy

    The business is booming, making money, and life is good. But, suddenly, things take a turn for the worse and you are forced to let staff go to make ends meet. Many of our members have been fortunate enough to avoid dealing with redundancy, but when a time does arise where an employee or group of employees must be made redundant, it can be really difficult for business owners to navigate the complex requirements.

    A redundancy is genuine if you no longer require anyone to perform a role which an employee currently holds. This can occur due to operational requirements of the business such as: restructure; downsizing; outsourcing; or, the closing down or sale of the business.

    I need to reduce my team of five sales employees to three as a result of economic downturn affecting the business. What rules are there to follow when choosing who will remain employed and who will become redundant?

    There are a few ways to select which employees will be made redundant during a downsizing process. The most fair and reasonable way to select which employees will be made redundant is through a skills matrix. When selecting employees, it is important to link your decisions with the operational requirements of the business. The selection criteria should be objective, non-discriminatory, and consistently and fairly applied.

    Best practice would be to map all of the affected employees on a matrix, against a series of selection criteria to clearly see which employees best suit the requirements of the business moving forward. Examples of possible selection criteria to use in your skills matrix would be:

    • Required skills: relevant experience, training, qualifications
    • Productivity levels (using objective, quantifiable records): sales data, daily production rates
    • Performance-based (be careful as this can get subjective; it is important that performance based selection is still closely linked to skills and productivity)
    • Remember: termination for redundancy can only occur where the job is genuinely no longer required by the business; it should not be used as a way to deal with concerns about an employee’s performance or conduct.

    Do I always have to offer a redundant employee another role within my business?

    No. You only need to redeploy an employee if it is reasonable to do so. If you do not have a suitable position for the employee, that is okay. For redeployment to be reasonable:

    • The employee must have the skills and competencies required, either immediately or with a reasonable period of retraining;
    • The job must be located in a feasible position, and if not, there should be consideration for extra travel expenses; and,
    • A similar rate of pay must be offered.

    I am making an employee redundant. They have been a full time employee for two years, and before they were full time they spent a year as a casual. What redundancy are they entitled to?

    While a casual employee is not entitled to receive redundancy pay under the Fair Work Act (s123(1)(c), their service as a casual may count under certain circumstances.

    Redundancy pay is based on the number of years of ‘continuous service’ the employee has completed with their employer.

    If the employment period as a casual was ‘irregular or uncertain’, or the employee was called in as required with no expectation of continued employment, it could be argued that this service was non-continuous. For the purpose of redundancy pay, service for this employee would be deemed to have commenced from the time the employee converted to full time.

    However, if the employee worked ‘regular and systematic’ weekly hours with a reasonable expectation that employment was ongoing, then the period of ‘casual’ employment would count as service for the purpose of redundancy pay.

    Is there a maximum amount of redundancy pay an employee can receive?

    There is no maximum monetary amount that an employee can be paid as redundancy pay. The National Employment Standards (NES) set out the minimum redundancy pay entitlement, which can be varied by an enterprise agreement, modern award, employment contract or your workplace policies.

    An employee is entitled to a certain number of weeks’ redundancy pay depending on their length of service. The entitlement must be paid at the employee’s base rate of pay for their ordinary hours of work. A high income does not make an employee exempt from redundancy pay.

    I am making an employee redundant and they have completed nine years of service. What happens to their long service leave?

    In Queensland, the entitlement to long service leave is reached at 10 years of continuous service. However, employees who have completed seven but less than 10 years’ continuous service are entitled to pro-rata long service leave if the employer dismisses the employee for a reason other than the employee’s conduct, capacity or performance.

    The redundant employee will be entitled to a pro-rata payment of their long service leave.

    Tags: redundancy

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  • Courts target sham contracting and underpaying

    Employers have been put on notice about hiring foreign workers and underpaying them.

    CCIQ Senior Employer Assistance Advisor Jason Wales said courts have signalled they will be tough on sham contracting and underpaying workers.

    Companies and their Directors are liable to heavy penalties.

    The Federal Circuit Court imposed fines of more than $250,000 for a serious breach of employment obligations in a recent Victorian case.

    The court found that the two workers had little understanding of Australian employment laws and their employment entitlements.

    The employer used this to his advantage and had deliberately underpaid them.

    The recent decision of the Federal Circuit Court imposed significant penalties on two companies, as well as their sole director, as a result of proceedings brought by the Fair Work Ombudsman for contravening the Fair Work Act 2009.

    Two Indian workers paid upfront ‘training fees’ of more than $2000 to an IT businessman based in Melbourne. The workers were led to believe this would lead to employment with his two training services companies.

    However, he did not provide the workers with proper accredited training and did not properly pay them. He alleged that the workers were independent contractors or alternatively were volunteering “to get local work experience”, and hence he did not need to pay them.

    The Fair Work Ombudsman conducted an investigation and then commenced legal proceedings against the businessman and his two companies in the Federal Circuit Court.

    The court found that the two workers had little understanding of Australian employment laws and their employment entitlements. The court found that he had used this to his advantage and had deliberately underpaid them.

    In determining the applicable penalties, the court found:

    • The contraventions were deliberate given that the companies had been subject to a Fair Work Ombudsman audit in 2011. That audit had put the companies and the sole director squarely on notice of their employment obligations.
    • There was no remorse or contrition. In that regard, the sole director had attempted to deregister the companies during the proceedings, presumably to avoid liability. He also initially admitted to contraventions by the companies but later denied them when he was joined to the proceeding.
    • The sole director was nothing more than the alter ego of the companies and attempted to use them as a shield. As such, he was involved in the companies’ contraventions.
    • There was a need to deter the sole director from engaging in future similar contraventions, as well as to discourage other directors from also attempting to avoid liability behind a corporate structure.

    The Court ordered that the man’s two companies pay:

    • $160,000 in penalties (one company was fined $40,000 and the other $120,000);
    • $16,000 in outstanding wages; and
    • $5,144 for dismissing a worker in breach of adverse action provisions when the worker complained about not being paid correctly.

    The court ordered that he pay $35,000 for engaging in sham contracting, underpaying workers and not keeping proper employment records.

    He attempted to de-register the two companies during the proceedings to try to avoid having to pay the workers. However, the court held that the two companies were nothing more than his “alter egos” which he attempted to use “as a shield for his own conduct”.

    The court indicated there was a need to deter employers from “attempting to use the corporate veil to avoid responsibility for workplace obligations where they have been the operating mind of the companies when conducting the breach”.

    CCIQ Viewpoint

    The decision is a timely reminder that individuals involved in contraventions, including directors, can be expected to face prosecution and may personally face fines if they are involved in or responsible for breaches of applicable employment obligations.

    CCIQ’s employer assistance team can help you understand your employment obligations and correct pay rates for employees, phone on 1300 731 988 or email

    DISCLAIMER: This document is an information source only. Despite our best efforts, CCIQ makes no statements, representations or warranties about the accuracy or completeness of the information and disclaims responsibility for all liability for all loss or damage you might incur as a result of the information being inaccurate or incomplete in any way, and for any reason. The information contained in this document is not intended to be nor should it be relied upon as a substitute for legal or other professional advice.

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  • Fair Work Basics: What is a Support Person?



    What is a support person? Can your staff member invite one, and what is their role supposed to be?

    Anastasia Caris, CCIQ Employer Assistance Advisor, discusses what is involved in these circumstances and how important it is in the workplace.

    The Fair Work Act tells us that an employer cannot unreasonably refuse for an employee to have a support person present during any disciplinary meeting or workplace investigation. Does this mean that you are obligated to offer a support person?

    There are no legislated guidelines in relation to who can be a support person, but we can rely on previous rulings to clarify the meaning of their role.

    This short video from the Employer Assistance Team seeks to provide you with an overview of when to offer a support person, who can be a support, and what their role will be in your meeting.

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  • Don't turn a blind eye to bullying

    A new mum who was severely bullied on her return to work has won a substantial payout after her employer failed to deal properly with her initial complaints.

    The Supreme Court of Queensland said her employer had been negligent and should have recognised the extent and severity of the bullying could have led to a psychological injury.

    The court heard that she was the “most loyal, dedicated, enthusiastic” member of staff before the bullying. She had sought more than $1 million in damages, with the commission opting for a near $250,000 payout.

    Bullying is repeated, unreasonable and unwanted behaviour that creates a risk to health and safety.

    If you fail to take reasonable care for the safety of an employee, you may be liable for negligence under common law.

    The Case:

    In a recent case before the court, it was found that the employer, A Queensland retail store, failed to take reasonable precautions to avoid causing injury to an employee after she returned from parental leave.

    While the employee was on parental leave a new store manager was hired. Issues were raised throughout her reference checks, criticising her inability to interact with people and the fact she had no experience within the retail fashion industry, however she was still appointed in the position.

    Within four days of returning from parental leave, the new mum made a bullying complaint to her State business manager with concerns about how the store manager was speaking to her in nasty tones, leaving her out of business decisions and criticising her work, including failing to mop the floors correctly and poor handwriting.

    Upon receiving this complaint, the state business manager failed to follow the company’s bullying and harassment policy and instead responded by calling the alleged offender to inform her of the bullying complaint made against her.

    The commission noted that notifying her of the allegations made against her did not remedy the matter, in fact, the bullying continued for a further seven days.

    The employee made an additional bullying complaint as a result of the continuing conduct and raised concerns about working in an isolated atmosphere where the store manager was commonly friendlier to other staff; being ignored when offering assistance; being excluded from business discussions and receiving “unwarranted criticism” about failing to sign “customers to the store’s VIP discount program” and not removing security tags from clothing.

    The victim was surprisingly told to “work it out herself” when she made the second complaint.

    The Verdict:

    As a result of her conditions at work, the new mum was diagnosed with a psychiatric disorder after deteriorating to the point where she could no longer take care of her own child, let alone attend work. As a result, she was awarded over $235,000 in damages after being bullied for 11 days.

    The court ruled that a reasonable person in the employer’s position should have recognised that failure to act responsibly after the initial complaint ‘considerably heightened’ Ms Keegan’s emotional distress and caused the injury to worsen after continued bullying. Consequently, it was found that the employer should have reasonably foreseen the psychiatric injury at risk.

    It was concluded the company was negligent as the store manager and the state business manager did not follow the businesses bullying and harassment policy, and in fact, permitted her to bully the employee.

    CCIQ Viewpoint:

    As seen in this case, when complaints of bullying are made, the correct processes need to be followed, and failing to do so will expose you to damages for negligence. If this does arise within your business, factors that are likely to be examined include:

    • If the psychological injury is recognisable, and not fanciful or implausible;
    • If a reasonable person could foresee the risk of stress causing psychological injury to the employee; and
    • Despite the abovementioned requirements being met, failure to take reasonable action to reduce or eliminate the risk at hand.

    This case is just one example that demonstrates how important it is for businesses to regularly train their staff in relation to these workplace matters, and to demonstrate an accurate record of that training.

    This will ensure, if and when a workplace matter such as the one mentioned here does arise, you will have confidence that the matter will be dealt with in a fair, transparent and compliant manner.

    Additionally, those in management or leadership positions especially need to comply with all workplace policies to assist you to create a safe work environment for your employees.

    If your business doesn’t have a workplace bullying and harassment policy or you think it may be out of date and in need of review, there are templates available for purchase from the CCIQ Bookstore.

    Contact CCIQ's Employer Assistance Team on 1300 731 988 or to discuss how you can minimise the risk to your business and avoid potential hefty penalties.

    DISCLAIMER: This document is an information source only. Despite our best efforts, CCIQ makes no statements, representations or warranties about the accuracy or completeness of the information and disclaims responsibility for all liability for all loss or damage you might incur as a result of the information being inaccurate or incomplete in any way, and for any reason. The information contained in this document is not intended to be nor should it be relied upon as a substitute for legal or other professional advice.

    Tags: bullying

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