Businesses facing tough commercial decisions in the current climate might consider asking employees to volunteer for redundancies as one way to cut costs. Voluntary redundancies help avoid the challenges that often come with selecting positions to be made redundant, and can prevent forced and disputed terminations. However, it is important that employers do not commit to making a position redundant unless the role in question is genuinely no longer required.
Considerations
In Clarke v Pacific National Services Pty Ltd [2023] FCA 699, Pacific National engaged in a lengthy consultation process regarding potential redundancies, which included asking employees to submit non-binding, and then binding, expressions of interest for options including alternative roles, job swaps and voluntary redundancies.
One group of employees submitted binding expressions of interest for voluntary redundancies, which were accepted by the employer. Later, the employer revised its position and advised that it would retain all employees. The union subsequently put forward that the employees had made binding contracts with the employer, and as a result, the affected employees were entitled to their redundancy payments.
Conclusion
The Federal Court sided with the union, acknowledging that binding contracts had been entered into by the parties. However, the Court also determined that these contracts were contingent on the positions being genuinely redundant. Therefore, since the employer had later decided to retain the roles, the positions were not genuinely redundant in the business. Accordingly, the employer was not obligated to fulfill the agreement and offer the employees redundancy in those particular circumstances.
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