Is It Really a Redundancy?

Hello, and welcome to Episode 244 of the People Powered Business Podcast!

Can you believe it’s already November? The year is flying by, and here we are with another important topic for business owners just like you.

In today’s episode, we’re diving into an area that’s critical but often misunderstood: redundancies.

Recently, I’ve been hearing about a surge in redundancies, especially in business groups, networks, and conversations with peers. But the big question is – are all of these redundancies legitimate, or are they sometimes being used as a workaround for performance issues that should have been managed differently? In this episode we explore why it’s so essential to get this right and discuss the real reasons for this trend.

Inside our People Powered HR community, each month we focus on a specific theme from The P.E.O.P.L.E Pathway. October’s focus was on ‘Exit’ – a challenging but necessary part of business and people management.

The reality is that people will exit our business, whether we choose to exit them or they resign. If we need to exit someone from our business, a redundancy may well be a valid way to do this, but we need to understand when and how they should be used. So today, I’ll share three key insights to help you navigate redundancy in a way that’s both compliant and compassionate.

In This Episode:

What is a Redundancy and When is it Genuine?

Redundancy is not as simple as many think. According to the Fair Work guidelines, redundancy is genuine when an employer no longer needs a role to be performed by anyone – not just one person – due to reasons like new technology, restructuring, or closing of operations. But here’s the critical part: redundancy cannot be used as a substitute for poor performance management. Following the correct consultation process, especially if employees are covered under awards, is a requirement to avoid the risk of unfair dismissal claims.

The Difference Between Redundancy and Performance Management

I’ve observed that some employers, especially during slower business periods, may attempt to label dismissals as redundancies. Often, this is because performance issues were allowed to continue unchecked, making redundancy seem like a convenient solution. However, if not managed properly, this can lead to costly repercussions, including redundancy pay in small businesses or even an unfair dismissal claim. It’s essential to distinguish between a genuine redundancy and cases where performance management should be applied.

Top Tips for Exiting a Staff Member with Integrity and Care

Exits are never easy, but there are ways to make the process smoother for all involved. First, get comfortable having difficult conversations, and address performance concerns early. Use the probationary period to its fullest extent, keeping minimum employment standards in mind. Practise compassion and approach every exit with honesty and facts, avoiding emotional responses. And finally, don’t be afraid to get help – navigating exits properly can protect your business and uphold dignity for all parties.

As always, I’d love you to join us inside our free Facebook Group, HR Support for Australian Businesses, so I can learn more about what’s working for you and any challenges you might be having. Join Here.

And as I mentioned, if you’d like to learn more about People Powered HR, you can get all the details and join us by clicking here.