Understanding redundancy and changes to duties when undergoing a restructure

In the wake of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, a number of major banks are undertaking restructures. Westpac has published a plan to simplify its structure, shifting its BT Financial group into its consumer and business divisions and selling parts of its advice sector. Further, the private wealth, superannuation, and platforms and investments businesses will be absorbed into an expanded business division. Whilst the insurance business will move into the consumer division. Similarly, at CommBank, ANZ and NAB, moves are being made to separate their wealth management arms (including services such as mortgage broking, insurance and financial planning) in a bid to resolve conflicts of interest.

This Banking Royal Commission guide is separated into two articles. Part 1 deals with possible scenarios employees may face in the event of a restructure, including what to look out for when faced with redundancies or a change of duties. Part 2 looks at rights and entitlements available to employees that have been made redundant.

Genuine redundancy

When companies undergo restructuring, redundancies will often result. A redundancy is where an employer no longer requires an employee’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise.

It will only be considered a genuine redundancy where the dismissal both fits within the definition above and the employer has complied with any obligation imposed by an applicable modern award or enterprise agreement to consult about the redundancy. See below for modern awards that may be relevant to employees in the banking and finance industry.

All awards and registered agreements will have a consultation process in place for redundancies that sets out certain obligations that the employer must undertake as soon as possible after the decision to make changes to the business. These obligations are contained in the Fair Work Act 2009 (Cth) and include:

  • Notifying the employees who may be affected by the proposed changes;
  • Providing the employees with information about these changes and their expected effects;
  • Discussing steps taken to mitigate adverse effects on the employees; and
  • Considering ideas or suggestions made by employees about the changes.

Essentially, a consultation needs to provide employees with a genuine opportunity to learn of the proposed changes and to influence the decision.

It is also essential that an employer makes efforts to redeploy employees to another role within their business or associated entity before making them redundant. Employers are obliged to redeploy employees where it would have been reasonable to do so in all the circumstances. Any vacant role which the employee is qualified to perform should be open for consideration, regardless of whether the job is in the same location, at a different level of seniority or less well renumerated.

As such, dismissal will not be a genuine redundancy where the employer hires someone else to do the original job, has not followed requirements to consult with employees, or could reasonably have redeployed the employee to another job within the employer’s enterprise. Also note that an employee is only able to make an unfair dismissal claim in relation to a redundancy where the redundancy is not genuine. If an employee does decide to make an unfair dismissal claim, they will have 21 days starting from the day they were dismissed to lodge an application with the Fair Work Commission.

Further detail on what will be considered a genuine redundancy can be found on the Fair Work Commission’s website.

Changes to duties

Another possible scenario in the event of a restructure is that an employer will look to change the duties of an employee. If this is the case, employees may seek to claim that rather than a simple change to their duties, what has actually occurred is a redundancy of their previous role. If they are successful, then they may be entitled to redundancy pay and their employer will be subject the obligations as outlined above.

The case of Gundi v Sensis Pty Ltd [2017] FCCA 1438 provides a good example of this. Mr Gundi was working as a Media Sales Advisor when he was informed that, as a result of a company restructure, his duties would be dispersed to other staff. He was also told that three new roles would be created in place of his position and he was redeployed into one of them. This new role was much more junior than his previous role and significantly curtailed his ability to make commissions. The court found that, in this context, Mr Gundi’s position had effectively been made redundant. As such, the employer was obliged to offer a ‘reasonable alternative position’ under the relevant enterprise agreement. Because his previous role was significantly more senior than his new role, it was found that this obligation had not been satisfied and he was entitled to 30 weeks’ worth of redundancy pay.

For further information on what rights and entitlements may be available to you in the event of a redundancy, read Part 2.