In this tough economic climate, more employers will consider making staff redundant. These decisions are usually made under financial pressure so it can be tempting to move forward without legal advice, but this is a false economy. Employers who don’t get sound advice before making redundancies are at risk of breaking the law and could be left much worse off.

Employers who mishandle redundancies may be required to defend unfair dismissal claims and may be the subject of investigation by the Fair Work Ombudsman. Investigations are a matter of public record and are publicly reported on, increasing the scope of potential damage to your organisation. There can be a range of financial and non-financial consequences including:  

• significant legal costs, and depleted internal resources, responding to unfair dismissal claims and Fair Work investigations; 

• orders for employee entitlements, plus interest and financial penalties;

• reputational damage in the market, impacting new business, investment and the ability to attract quality new hires;

• decreased morale among continuing staff leading to increased turnover.

The last two examples are consequences that could have a long-term or even permanent impact on the profitability and future prospects of the organisation.  

If you are considering redundancies, invest in sound legal advice before taking any other action. Your lawyer can also provide ongoing support throughout the process if required. Don’t wait for an unfair dismissal claim or investigation before consulting a lawyer. By that time, a lawyer can still help, but typically any damage cannot be undone, and the costs and other risks are considerably higher.  

We can help

Kinny Legal can help you understand your obligations and advise you on how to execute redundancies both generally and in response to specific situations, including more complex scenarios such as when staff are on maternity leave or are casual or contract workers. We can also act for your organisation in response to unfair dismissal claims and Fair Work investigations. Some examples of our recent experience includes:

• Providing advice to a number of global technology companies on redundancies across their Australian operations in late 2022. 

• Assisting an ASX-listed software company with restructuring their organisation and making a substantial number of their team redundant. We acted throughout the redundancy and prepared all relevant notifications and documents, calculated entitlements and provided support and guidance every step of the way. No unfair dismissal claims were made and the restructure was considered a success. 

• Advising a medical practice on restructuring the practice to become profitable. This included making a number of nursing and administrative staff redundant, as well as changes to position descriptions, hours and remuneration of the remaining staff. The matter was complicated by the fact that many staff had been in the business for 10+ years under a previous owner and the new owner had inherited legacy issues and the union was also involved. We advised on the entire redundancy process according to the relevant Awards. We balanced risk management against the client’s desired outcomes and the business restructure was ultimately successful.

To find out more about how we can help, call us on 02 9199 4563 or email info@kinnylegal.com.

 This blog post does not constitute legal advice and should not be relied upon as such. It is a general commentary on matters that may be of interest to you.  Formal legal or other professional advice should be sought before acting or relying on any matter arising from this communication.

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