Redundancy

Find out what happens when employment ends because of a genuine redundancy, including what consultation needs to happen, notice requirements and what payments need to be made.

When does redundancy happen?

Redundancy happens when an employer either:

  • doesn't need an employee’s job to be done by anyone, or
  • becomes insolvent or bankrupt.

Redundancy can happen when the business:

  • introduces new technology (for example, the job can be done by a machine)
  • slows down due to lower sales or production
  • closes down
  • relocates interstate or overseas
  • restructures or reorganises because a merger or takeover happens.

What's a genuine redundancy?

A genuine redundancy is when:

  • the person’s job doesn't need to be done by anyone
  • the employer followed any consultation requirements in the award, enterprise agreement or other registered agreement.

When an employee's dismissal is a genuine redundancy the employee isn't able to make an unfair dismissal claim.

A dismissal is not a genuine redundancy if the employer:

  • still needs the employee’s job to be done by someone (for example, hires someone else to do the job)
  • has not followed relevant requirements to consult with the employees about the redundancy under an award or registered agreement, or
  • could have reasonably given the employee another job within the employer’s business or an associated entity in the circumstances.

Consulting with employees about major workplace changes

All awards and registered agreements include a consultation process to be followed when there are major changes to the workplace, such as redundancies.

The consultation process sets out the things the employer needs to do when they decide to make changes to the business that are likely to result in redundancies. This has to be done as soon as possible after the decision has been made to make these changes.

Consultation requirements include:

  • notifying the employees who may be affected by the proposed changes
  • providing the employees with information about these changes and their expected effects
  • discussing steps taken to avoid and minimise negative effects on the employees
  • considering employees' ideas or suggestions about the changes.

Source reference: Fair Work Act 2009 s.119, 139, 388, 389 external-icon.png


Best practice tip

Our Termination of employment letter – redundancy template (PDF 371.9KB) (DOCX 37.6KB) includes a step by step guide to handling the redundancy process.

If an employer is considering redundancy of 15 or more employees, they need to give written notification to Services Australia of the proposed dismissals. More information, and a notification template, can be found on the Services Australia website external-icon.png.

Source reference: Fair Work Act 2009 s.530 external-icon.png

For a quick overview of what redundancy is, watch our short video to understand when redundancy occurs and who is eligible.

 

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