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Employment Law - The Three 'R's' & Unfair Dismissal

Date: July 04, 2009

Authors: LAC Lawyers

What we’re referring to here is not the traditional ‘three R’s’ associated with education, but rather, the ‘R’ words in the context of employment and industrial law: resignation, retrenchment, and redundancy. Perhaps the word ‘retirement’ could also be added.  This has great relevance in the current economic climate.
 
Resignation in the true sense is straightforward. It is termination on the part of the employee.
 
Retrenchment however is a general term referring to the laying-off of an employee by the employer. It may refer to the termination of employment by the employer for or on the grounds of redundancy or for some other reason but generally suggests the laying-off of staff to reduce costs.
 
Redundancy occurs, strictly speaking, when the employer no longer requires the particular job, which has been done by some employee, to be done by anyone. Notice that it is the job which becomes redundant, not the employee.
 
In each case, termination of employment is involved. On the question of whether the termination could lead to a claim against the employer for being unfair, other questions need to be considered, namely: who initiated the termination, and, what were the circumstances surrounding the termination? 
 
Many employment terminations may be referred to as ‘resignations’ or ‘retrenchments’. The reality may be that they are simply, a ‘sacking’ of the employee. A resignation may be disguised as a sacking notwithstanding that the employee is said to ‘resign’. This is a blatant case of unfair dismissal which needs to be pursued.
 
For example, if an employee were told by the boss, ‘You’ll have to resign or we’ll sack you’, it would generally amount to sacking, a forced resignation. It’s what is often called in legal terminology a ‘constructive dismissal’. It constitutes a dismissal notwithstanding it’s been called something else. The employee may also refer to it as a resignation because he or she does not want to lose face. But when it comes down to it, it’s a termination of the employment initiated by the employer. Depending on the particular circumstances, there may be grounds for the employee to challenge the termination of the employment.
 
Whether a termination is a redundancy or not depends on the particular circumstances. As mentioned above, it is the job which becomes redundant, not the worker. The worker, of course, suffers the consequences. This has particular relevance to the present, in situations where employers are finding themselves with too many employees, especially if the market for their goods or services has shrunk.  Employers need to obtain advice to avoid the potential for unfair dismissal claims and employees to ensure that they have a claim and been paid their full entitlements.
 
An employer is entitled to restructure its business as it sees fit. Having said that, a redundancy may be unfair and therefore challenged on the grounds of its not being done in good faith, that the employee has not been sufficiently consulted, that a fair selection process has not been applied, that alternative work has not been considered, or that sufficient notice of termination has not been given. Alternatively a redundancy might be challenged on the basis of the severance payment being insufficient.
 
In circumstances where an employer has more than one reason to terminate the employment of an employee, such as both redundancy and poor performance, the employer will need to comply with the requirements for giving fairness in its procedure applicable to both grounds. If the employer has not done this, there may be grounds for a claim by the employee.
 
Accordingly employers need to take care in observing appropriate procedures before terminating the employment of an employee.  Whether employer or employee call LAC Lawyers for an appointment on (02) 9904 6800 to obtain proper professional advice and assistance.
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