Redundancy

Redundancy is when a business no longer needs an employee’s role to be done by anyone. When an employer makes an employee’s job redundant, they may need to pay the employee severance or redundancy pay.

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.

Video: Redundancy

Watch our short video on redundancy to learn about:

  • when redundancy happens
  • which employees are eligible for redundancy pay
  • how to work out redundancy pay.

 

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.

For best practice tips, see Consultation and cooperation in the workplace.

Source reference: Fair Work Act 2009 s.119, 139, 388, 389

Best practice tip

Our Termination of employment letter – redundancy template  includes a step-by-step guide to handling the redundancy process.

Redundancy of 15 or more employees

If a business is considering redundancy of 15 or more staff, the employer must give written notification to Centrelink of the proposed dismissals as soon as possible and before the employee is made redundant.

The notice must set out the:

  • reason for the dismissals
  • number and categories of the employees likely to be affected
  • timing of the dismissals.

More information and a notification template is available on the Services Australia website. Penalties may apply if an employer fails to comply with these notice requirements.

Source reference: Fair Work Act 2009 s.530

Further support for redundant employees and their 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 tailored employment services under the Early Access initiative, prior to becoming eligible for income support. For information about what support services are available, visit Next steps if you lose your job.
  • The ‘What’s Next’ website provides an online self-help resource for affected employees and employers.
  • The Employer Checklist helps employers who are considering restructuring make the best decisions for their staff and their business. This checklist assists employers know their obligations, entitlements and alternatives to retrenchment.

For information about what to do if you’ve been made redundant or are looking for a new job, visit the What’s Next website on the Department of Employment and Workplace Relations website. This support is provided under Workforce Australia Services.

 

Workforce Australia

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:

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