Rehiring after redundancy, can it happen?

Redundancies are a result of the constantly changing business landscape, technological advances, and operational needs that employers must deal with. These same changes might give rise to a situation where you’re in the position of considering rehiring an employee who has previously been made redundant. This article will outline how this can be done, and the factors that might affect your decision. 

 1. Was it a genuine redundancy?

Rehiring an employee after engaging in a redundancy process can affect the impression of whether a redundancy was genuine. 

In other words, if the employee’s position was no longer required to be performed by anyone and was terminated, one might then question why they’ve been rehired. However, the fact of the matter is that the consideration of redundancy is a point-in-time test. That is, it may have been entirely reasonable due to operational requirements of the business a few months ago to have made the employee redundant, however now, due to additional operational requirements, it may be the fact that the same position previously made redundant, is now required of the business. 

The question businesses should ask themselves is, what has changed since termination that warrants the role, the function, or the responsibilities to be required again? 

It might also be questioned whether, if the employee has been rehired in a different role after redundancy, why that role wasn’t offered to them as a reasonable redeployment opportunity earlier. However again, redundancy is a point-in-time test. If this new position wasn’t available at the time you made the employee redundant, then you would not have offended the criteria of genuine redundancy under the Fair Work Act 2009 (Cth) (FW Act). If post redundancy a new role becomes available, a business is within its rights to reach out to the employee it made redundant to ascertain whether they would be interested in applying for the position. 

It is important to remember that as part of the genuine redundancy process, the employer has a requirement to consider whether there are any reasonable redeployment opportunities to provide the employee. Reasonable redeployment roles extend to roles which are available at the time of the redundancy and to which the employee has the requisite skills or knowledge to perform.

2. What are the consequences if the redundancy wasn’t genuine?

A redundancy process that isn’t genuine can be the subject of an unfair dismissal claim. In certain circumstances, the rehiring of an employee may raise eyebrows as to the genuineness of the redundancy. 

An important factor to keep in mind is that employees generally have 21 days after termination to make an application for an unfair dismissal claim. Depending on the time between the redundancy and the rehiring, it would be likely that the time limit to make a normal claim has lapsed. 

However, claims submitted after the 21-day period may be granted an extension in extenuating circumstances that don’t necessarily need to be related to the termination of employment. If the time limit doesn’t apply, and a rehiring has occurred without an adequate explanation of the above factors, businesses may be at significant risk of a successful unfair dismissal claim about the initial redundancy.

3. What are the implications for leave entitlements in circumstances where an employee has been re-employed?

Annual leave entitlements are required to be paid out on termination. Since the employee would have been paid out their annual leave entitlement at the time they were made redundant, at the point of being re-hired, the employee will commence accruing annual leave from the start again. 

Personal leave, on the other hand, isn’t paid out upon termination. A termination by way of redundancy will break the employee’s continuity of service for personal leave accrual. This means that despite not having been paid out the leave, they will begin to accrue personal leave again upon rehiring. 

Long service leave is a more difficult determination and whether there is a break in the continuity of service will depend upon the length of the break between the periods of service. Long service leave entitlements differ in each jurisdiction, and it is important you consider the laws relevant to your state. 

If you are thinking about rehiring an employee who was previously made redundant and need support, our experts can help via the 24/7 Advice Line.

About our author  

Anthony El Salim is a Workplace Relations Advisor at Citation HR. He assists clients with a range of employment relations and compliance matters via the 24/7 Advice Line.