Redundancy
Overview
Redundancy occurs when an employer no longer requires a particular job to be performed by anyone, or where the employer becomes insolvent or bankrupt. It is one of the most common reasons for termination of employment in Australia, but the legal requirements surrounding it are frequently misunderstood — by employers and employees alike.
Under the Fair Work Act 2009 (Cth), a redundancy will only be considered genuine if the employer no longer requires the job to be done by anyone, the employer has complied with any obligation in a modern award or enterprise agreement to consult about the redundancy, and the employer has met its obligation to redeploy the employee where it is reasonable to do so. If any of these elements is missing, the dismissal may not qualify as a genuine redundancy and could be vulnerable to an unfair dismissal claim.
Redundancy is ultimately about the role, not the person. If the duties previously performed by the employee continue to be carried out — whether by another employee, a contractor, or through a restructured position — there is a real question as to whether the redundancy is genuine. This distinction is often where disputes arise.
Key Considerations
An employee who is made redundant is generally entitled to redundancy pay under the National Employment Standards, calculated by reference to their period of continuous service. The scale ranges from four weeks’ pay for at least one year of service up to sixteen weeks’ pay for at least nine years of service. Some modern awards and enterprise agreements provide for additional entitlements.
The obligation to consult is a substantive one, not merely procedural. Where a modern award or enterprise agreement contains a consultation clause — and most do — the employer must notify affected employees, provide relevant information in writing, and genuinely consider any matters raised by the employee. A failure to consult properly can undermine the genuineness of the redundancy and may also constitute a breach of the award or agreement.
Redeployment is assessed on the basis of what is reasonable in the circumstances. Relevant factors include the qualifications and experience of the employee, the nature of available positions, the location of those positions, and the remuneration attached to them. The employer is not required to create a position that does not exist, but it must take reasonable steps to identify and offer suitable alternatives where they are available.
Small business employers (fewer than 15 employees) are exempt from the obligation to pay redundancy pay under the National Employment Standards. However, they remain subject to other requirements, including the obligation to provide notice and to ensure the redundancy is genuine.
Redundancy processes frequently attract related claims — most commonly unfair dismissal, but also general protections claims where the employee alleges the real reason for the termination was a prohibited one. A poorly documented or hastily conducted process significantly increases the risk of such claims succeeding.
How We Can Help
We advise employers on the planning and implementation of redundancy processes — from initial assessment of whether a genuine redundancy exists, through consultation, redeployment, and the management of associated legal risk. We also represent employers and employees in unfair dismissal and general protections proceedings where the genuineness of a redundancy is in dispute.
Whether you are restructuring a team, managing a single role removal, or responding to a claim arising from a redundancy, we can provide practical, commercially focused guidance.
Speak With Our Team
If you are considering or responding to a redundancy and want to understand your legal position, we are happy to have a confidential conversation about your circumstances.