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LAW604 - Week 10 (Redundancy The Law)

Redundancy refers to a situation where an employee's job ceases to exist. Under Fijian law, employers are permitted to undertake redundancy for economic, technical, or structural reasons. The Employment Relations Act outlines several requirements for redundancy, including providing 30 days notice to employees and the Permanent Secretary of Labour, consulting on measures to avoid or mitigate redundancy, and providing a minimum redundancy package of one week's wages for each year of completed service. While the law provides a minimum, employers may offer additional redundancy payments at their discretion.

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Shareen Chand
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39 views14 pages

LAW604 - Week 10 (Redundancy The Law)

Redundancy refers to a situation where an employee's job ceases to exist. Under Fijian law, employers are permitted to undertake redundancy for economic, technical, or structural reasons. The Employment Relations Act outlines several requirements for redundancy, including providing 30 days notice to employees and the Permanent Secretary of Labour, consulting on measures to avoid or mitigate redundancy, and providing a minimum redundancy package of one week's wages for each year of completed service. While the law provides a minimum, employers may offer additional redundancy payments at their discretion.

Uploaded by

Shareen Chand
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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LAW604: LABOUR LAW & ETHICS

REDUNDANCY & THE LAW

1
CONTENTS
1. Introduction
2. Redundancy in Context
3. Objectives - Part 12 of ERA
4. Grounds of Redundancy - Part 12 of ERA
5. Redundancy Provisions - Part 12 of ERA
6. Redundancy Package - Part 12 of ERA
7. Summary & Conclusion
8. Review & Tutorial Questions

2
INTRODUCTION
 Redundancy, generally arises where an employee 's job ceases to
exist
 The reasons for a job ceasing to exist might be due to:

 The financial position of the firm, lack of work, the firm closing
down, or a reorganization/restructure within the firm

 Alternatively, the employer may have decided that the employee's


job is going to be done in a different manner, and

 The employee is being replaced by a person who has the necessary


qualifications or training to deal with the new arrangement

 Example: Change in Job Description, Job Specifications,


Amalgamation of Jobs
3
INTRODUCTION (CONT)
 An employee is said to be ‘retrenched’ when his or her job becomes
redundant, and
 The employer either cannot offer the employee any alternative
position, or,
 Any alternative position offered by the employer cannot be accepted
by the employee.
 The concept of ‘retrenchment’ is usually linked with ‘redundancy’,
and
 Also with the concept of ‘severance’ or ‘severance pay’

 Severance is the expression, usually seen as ‘severance pay referable


to the amount or amounts an employee receives upon being
retrenched

4
REDUNDANCY IN CONTEXT
 Redundancy law can be at times complicated and it is vital that you
understand the ins and outs of redundancy so you can ensure you
know your rights.
 Often people think there is a distinction between a dismissal and
redundancy. There is not the case.
 Redundancy is one of a number of reasons for an employer to
dismiss an employee.
 If you are being made redundant it is because you employer
considers your position is surplus to the needs of the business.
 It can never be used to unfairly dismiss someone for some other
reason.
• You can only be made redundant for genuine commercial reasons
such as your position is no longer needed
5
REDUNDANCY IN CONTEXT (CONT)
• There has been a decline in available work
• The company need to restructure how they do things, or
• The company want to contract out work or sell or transfer part of the
employer's business.
• Redundancy law says your employer cannot use redundancy as a way
to dismiss you for reasons relating to your personality, performance,
reliability or age (there is no compulsory retirement age in New
Zealand).
• Your employer can also never put pressure on you to resign or make
your work situation unbearable for you.

• If this happens you may have grounds to file a personal grievance


claim as it is forced resignation or constructive dismissal.
6
REDUNDANCY IN CONTEXT (CONT)
• If your employer is intending to remove staff they are legally
required to tell you what they are proposing to do and how many
staff would be laid off under the proposal, which jobs would be cut
and how they will run the redundancy process which includes how
they will decide who will lose their jobs

• They must also give you time to think over and comment on the
criteria given.

• Most employment agreements will set out guidelines for what the
employer should do in the case of redundancy.

• Some employment agreements will outline a redundancy payment


but they are not legally required to hand out redundancy payments
if it is not stated in the contract.

7
PART 12 – REDUNDANCY (NEW) Sec 106 - 108
Objectives
 Social protection with minimum disruption to the worker
 Provide workers facing redundancy with some degree of certainty
 Advise workers about the problems faced by the employer
 Assurance of compensation on the part of employer
 Employer contemplates termination of employment by redundancy
of workers for reasons of:
 Economic Reasons– means maintained for profit

Technical/Technological Reasons - means a matter concerning,


or use of, technology or information technology example:
introduction of new technology
Structural Reasons - means in relation to a company,
corporation, business enterprise or workplace the manner in
8 which such entity is organized, managed or administered
PART 12: REDUNDANCY PROVISIONS
 Employer to give 30 days redundancy notice to workers or their
representatives
 Employer to provide ALL relevant information, including reasons for
the termination contemplated
 Employer to provide the number and categories of workers likely to
be affected. Example: number of workers affected and their work
classifications/status
 Employer to provide period over which the terminations are
intended. Example: the effective date of terminations

• Consultation
 Aversion of redundancy – measures to avert termination
 Minimize termination - measures to minimize effect
 Mitigate - measures to mitigate effect
9
PART 12: REDUNDANCY PROVISIONS (CONT)

What are measures that can be taken to avert, minimize or mitigate


adverse effects of terminations? Example: finding alternative
employment or retraining
PS Labour to be notified (30 days)

Redundancy Package - Minimum of one week’s wages for each


completed year of service.
A worker is not entitled to the payment of the specified wages unless
he/she has completed one year of continuous service with the company
Nothing prevents an employer from giving to a worker redundancy
package in excess of that required to be given under the ERA

It is the prerogative of employers – ability to pay for a golden


handshake
1
0
SUMMARY & CONCLUSION
 Redundancy is not a new phenomenon in the commercial world
 Employers are empowered under the law to opt for redundancy
based on 3 grounds
 Grounds for redundancy include: economic reasons, technological
reasons, and structural reasons

 However, there are provision in the ERA that requires employers to


fulfill before pursuing redundancy

 Employers to provide workers/representatives 30 days notice


before carrying out redundancy

 Employers to advise PS Labour (30 days period) before termination


with relevant information, including reasons for terminations
contemplated
11
SUMMARY & CONCLUSION (CONT)
 Information to PS Labour to also include number and categories of
workers that will be affected as a result of redundancy

 Provisions for consultation to try and avert, minimize, mitigate the


adverse effect of termination

 Provision for retraining and employment placement – job search

 Redundancy payment is an equivalent of a week’s pay for each


completed year of service

 A worker who has not been in employment for a period of 1 year


is not entitled for redundancy or severance payout

 Employer has the prerogative to pay redundancy package in excess


of requirement under the ERA
12
REVIEW & TUTORIALQUESTIONS
1. In your own words, describe what is redundancy?

2. Distinguish between redundancy and termination; is there a relationship?

3. Is redundancy permissible under the employment law in Fiji? Discuss.

4. Assuming you are the Managing Director XYZ Company, a retail business in
Nadi. Under what circumstance could you undertake redundancy?

5. Examine the procedures/provisions for redundancy as stipulated in Part 21 of


the ERA?

6. What is the minimum redundancy package provided under ERA? Can an


employer pay below/above the minimum requirement as prescribed
under ERA?

7. As a labour law student, what advice and recommendations would you provide
to unions and employers alike before, during, and after a redundancy process?

8. 8. What do you mean by placement in the context of redundancy?


13
THANK YOU!

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