What to know in advance of any possible restructure
Short answer: A role can be genuinely redundant, the commercial logic sound, and the dismissal still found unfair, because at Fair Work the process is what gets tested. A redundancy stands up when you can show 3 things: the role was genuinely redundant, you consulted properly before the decision, and you have it all in writing. The order of those steps decides the case.
We are seeing restructures and redundancies pick up across our desk as business confidence dips, and the same expensive mistake keeps appearing. Employers put all their attention on the decision: who goes, what it costs, whether the business can carry the role. The process that gets them there barely rates a thought.
At Fair Work, the process is the part that gets tested. A role can be genuinely redundant, the commercial logic can be sound, and the dismissal can still be found unfair because you skipped a step you didn’t know you had to take. Compensation for unfair dismissal is capped at the lesser of 6 months’ pay or $91,550 this financial year. For someone on $100,000, that is up to $50,000 before you have paid a cent in legal fees, lost a week of management time, or felt the distraction of running a dispute.
This matters even if nothing is decided yet
Consultation obligations arrive earlier than most employers expect. Under most modern awards, once you are seriously considering a restructure you are required to tell affected employees, in writing, that changes are being considered, that no decision has been made, and that you want their input before anything is settled. If you are already sketching the new structure, the clock has started.
And if a restructure is just a possibility you are turning over for later in the year, this is the cheap window. Getting your employment contracts, policies and process mapped now, while it is calm, costs a fraction of repairing a challenge later.
The 3 things you have to be able to show
A redundancy stands up when you can demonstrate 3 things: the role was genuinely redundant, you consulted properly before the decision was made, and you have it all in writing. Most employers are confident about the first and have never heard of the other 2.
Gina Bozinovski, our Special Counsel, runs these matters for our clients. Her warning is blunt:
The outcome is almost secondary. What gets tested is the process, and whether you can demonstrate the key steps were met. It’s almost impossible to unscramble the eggs once you get it wrong. In fact, I don’t think you can.
The order of steps decides the case
The documentation has to exist before the consultation starts. The consultation has to happen before the decision is made. Run it the other way, decide first and paper it afterwards, and the record shows exactly that. A decision already locked in and then dressed up as consultation is the first thing that gets picked apart, and there is no fixing it later.
What good looks like
We acted for an employer who ran a restructure the way it should be run. Affected employees were consulted before anything was settled. A support person was available throughout. People were given several days to attend meetings and respond. Every step was put in writing.
The decision was challenged anyway. It made no difference, because the employer could show, step by step, that the process was followed. Anyone can lodge a claim, with or without grounds. Your protection is being able to show, when one arrives, that you did everything correctly.
One more number while we are here. Unfair dismissal is the capped pathway. A claim that goes down the general protections route instead is not capped the same way and can run far higher.
Talk to us before you tell anyone
The most expensive words in a redundancy are usually the first ones said to the employee, because they are often said before the process exists. The cheapest move you will make is a short conversation to map the steps before you act.
- A consultation with one of our employment lawyers, to map the process for a restructure you are considering right now.
- The Legal Line, a subscription giving you as many short calls as you need, so an uncertain cost is never the reason you stayed quiet.
- A Legal Health Check, where we look across your employment contracts and policies and tell you where the gaps are before a restructure puts weight on them.
Not sure which one fits? Book in a free consultation and we will work out the best approach with you. What you say and do in the first few days is what decides the case, so make the call before you make the decision. Once the egg is scrambled, we can’t unscramble it for you.
Common questions about redundancy and the process
Can a genuine redundancy still be unfair dismissal? Yes. A role can be genuinely redundant, the commercial logic can be sound, and the dismissal can still be found unfair because you skipped a step you did not know you had to take. At Fair Work the process is the part that gets tested, not just the decision. Most employers are confident the role was redundant and have never heard of the consultation and documentation steps that sit alongside it.
What do I have to prove for a genuine redundancy? A redundancy stands up when you can demonstrate 3 things: the role was genuinely redundant, you consulted properly before the decision was made, and you have it all in writing. Most employers are confident about the first and have never heard of the other 2. The order matters too, because the consultation has to happen before the decision, not after it.
When do consultation obligations start in a restructure? They arrive earlier than most employers expect. Once you are seriously considering a restructure and starting to sketch the new structure, the clock has started. The consultation has to happen before the decision is made. Run it the other way, decide first and paper it afterwards, and the record shows exactly that. A decision already locked in and then dressed up as consultation is the first thing that gets picked apart.
How much is unfair dismissal compensation in Australia? Compensation for unfair dismissal is capped at the lesser of 6 months’ pay or $91,550 this financial year. For someone on $100,000, that is up to $50,000 before you have paid a cent in legal fees or lost management time to running a dispute. A claim that goes down the general protections route instead is not capped the same way and can run far higher.
What is the difference between unfair dismissal and general protections? Unfair dismissal is the capped pathway, limited to the lesser of 6 months’ pay or $91,550 this financial year. A general protections claim is not capped the same way and can run far higher. Anyone can lodge a claim, with or without grounds. Your protection in either case is being able to show, when a claim arrives, that you ran the process correctly and have it in writing.
Curious how this plays out in practice? Read the full breakdown here: AI is flooding Fair Work with baseless claims
