Let me go: Voluntary redundancies prove too popular

Making a decision to restructure operations, particularly where it may result in a reduction in the number of positions, is not easy for businesses.

While it is often an unpleasant process, in some circumstances (depending on the nature of the workforce) employers may choose to call for expressions of interest for voluntary redundancies before moving to compulsory redundancies. This process may be desirable for employers where an immediate reduction in the number of positions is required and the employer anticipates that employees will favourably consider voluntary redundancies.

An expression of interest process was recently undertaken at the Streets Ice-Cream Minto production facility in NSW. In bargaining for the new Unilever Australia Trading Ltd, (trading as Streets Ice Cream, Minto) Enterprise Agreement 2007 (the Agreement), it was agreed that 50 full-time positions would be made redundant.

Under the Agreement, the redundancy provisions set out the requirements for the selection process, including that initially there was to be a call for applications for voluntary redundancy.  In this matter, it was agreed that preference was to be given to employees:

  • where their positions no longer existed or had significantly or substantially changed; or

  • where they had compassionate grounds because of the effect of new roster arrangements on their personal or family circumstances.

The expression of interest process resulted in a greater number of applicants than required and after an initial review, the employer identified the employees who satisfied the preferences above. However, 15 employees lodged an appeal against the initial review, seeking that their applications for voluntary redundancy be preferred.

The matter was considered by the Fair Work Commission in “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) v Unilever Australia Ltd T/A Streets Ice-Cream, Minto [2018] FWC 752 (Streets decision).

After giving each employee an opportunity to provide further submissions, Commissioner Riordan assessed each application. He ultimately determined that 6 applicants should be offered voluntary redundancy due to compassionate grounds because of the effect the new roster would have on their health or personal circumstances. Applications which were rejected included where an employee argued that the new roster was going to have an adverse impact on playing golf on Saturday, and where the personal circumstances were not affected by the new roster.

Lessons for employers

Where an employer chooses to offer the opportunity for employees to volunteer for redundancy, it is helpful to first develop selection criteria in order to identify the skills which will continue to be required by the business. The selection criteria will then be used to assess the applications received. This will also ensure that selections are determined objectively. Of course, like in the Streets decision, the employer may also be required to provide consideration to the personal circumstances of employees, such as health issues or family/carer responsibilities.

Shane Koelmeyer is a leading workplace relations lawyer and Director at Workplace Law. Workplace Law is a specialist law firm providing employers with legal advice, training and representation in all aspects of workplace relations, employment-related matters and WH&S.

02 9256 7500 | sydney@workplacelaw.com.au

Information provided in this blog is not legal advice and should not be relied upon as such. Workplace Law does not accept liability for any loss or damage arising from reliance on the content of this blog. Where applicable, liability is limited by a scheme approved under Professional Standards Legislation.

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