Articles and legal news from the Atkinson Vinden Team.

Navigating Redundancy: When is it a sham?

Employment Law

Recently AV advised a business that was contemplating making a mid tier executive employee redundant.  The most significant risk was that the executive would file an Unfair Dismissal Claim in the Fair Work Commission on the basis that the redundancy was a sham.  The Company still required a very similar role to the employee’s position and a replacement would be hired.  At the heart of this query, the Company wanted the role to exist, however the employee no longer met the Company’s requirements.  The Company ultimately reassigned the employee, with his consent, to a more suitable position.

A redundancy is a sham if the same role continues to exist and the employee will be replaced.  Redundancy is concerned with the position, not the employee’s performance.

Options for Business:

  • Performance manage the employee if the real reason for the change is related to their performance in the role;
  • Consider transferring the employee to an alternative position, more suitable to their skills, qualifications and experience;
  • Consider reducing the employee’s hours if the role can be performed in less time;
  • Offer a voluntary redundancy in which the employee is provided with a “golden handshake” if they waive their rights to a claim;
  • Consider restructuring the role by allocating the role’s tasks to numerous different existing employees. This is genuine redundancy.

Each of the above options may be available to the employer, depending on the circumstances of the employment.

If your business is considering implementing redundancies or a restructure, please contact a solicitor in our Employment Team to discuss your circumstances.


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