Redundancy

What happens when employment ends because of a genuine redundancy, what does it mean, how much is paid and what are the consultation and notice requirements.

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, in the circumstances, given the employee another job within the employer’s business or an associated entity.

Consulting with employees about major workplace changes

All awards and registered agreements have a consultation process for 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 includes a step-by-step guide to handling the redundancy process.

If a business is considering redundancy of 15 or more staff, employers need to give written notification to Services Australia of the proposed dismissals. More information and a notification template are available on the Services Australia website external-icon.png.

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

Further support for affected employees and employers

As part of the consultation process, employers can provide the following information about support and resources available to employees being made redundant:

  • affected employees and their partners have immediate access to jobactive, prior to becoming eligible for income support. Through jobactive, job seekers have access to tailored help, based on their needs. For information about jobactive eligibility and other support services available, affected employees can also access the Help for workers who have recently lost their jobs external-icon.png fact sheet.
  • the ‘What’s Next’ website external-icon.png provides an online self-help resource for affected employees and employers.

The Good Practice in Socially Responsible Restructuring external-icon.png guide helps employers who are considering restructuring make the best decisions for their staff and their business. The guide highlights how socially responsible restructuring can turn a stressful experience into a positive career transition for employees.

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

 

For information about what to do if you’ve been made redundant or are looking for a new job, visit What’s Next? on the Department of Education, Skills and Employment website external-icon.png.

What's Next website

 

Tools and resources

Related information

Have a workplace problem?

Problems can happen in any workplace. If you have a workplace problem, we have tools and information to help you resolve it.

For employees:

If you’ve lost your job, contact the Fair Work Commission (the Commission) first if you think you were sacked because of:

  • discrimination
  • a reason that is harsh, unjust or unreasonable
  • another protected right.

You have 21 days starting from the day after you were dismissed to lodge an application with the Fair Work Commission. Check the information at the Commission website to find out if you can apply for:

If you think you haven’t been paid everything you’re owed:

  • read about Notice and final pay to find out what you should get
  • see our Fixing a workplace problem section for practical advice on:
    • talking to your employer about fixing your notice and final pay if it’s wrong
    • getting help from us if you can’t resolve it.

For employers:

Help for small business