Redundancy

Redundancy is when a business no longer needs an employee’s job to be done by anyone.

Learn more about when redundancy happens and what employees are entitled to if they’re made redundant.

On this page:

Understanding redundancy

Redundancy happens when an employer:

  • 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 a takeover happens.

Redundancies can be genuine or not genuine, depending on the circumstances.

Genuine redundancy

A genuine redundancy is when:

  • the employee’s job doesn't need to be done by anyone, and
  • the employer followed the consultation requirements in the relevant award or enterprise agreement.

If the redundancy is genuine, the employee can't apply for unfair dismissal.

Employers need to consult with their employees before a redundancy occurs. Learn more at Consulting with employees about major workplace changes.

Tip: Our role at the Fair Work Ombudsman

We can’t decide if your redundancy is genuine.

We can give you information about your workplace entitlements, such as redundancy pay.

To find out if your redundancy was genuine, you should consider seeking legal advice. Visit Legal help.

Not a genuine redundancy

A dismissal is not a genuine redundancy if the employer:

  • still needs the employee’s job to be done by someone
  • hasn’t followed the consultation requirements in the relevant award or registered agreement, or
  • could have reasonably given the employee another job within the employer’s business or an associated entity.

If the redundancy is not genuine, the employee may be able to apply for unfair dismissal.

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.

 

Redundancy pay

If an employee is made redundant, they may be entitled to redundancy pay. Redundancy pay is based on continuous service with an employer.

For more information, visit Redundancy pay.

Consulting with employees about major workplace changes

All awards and enterprise agreements have a consultation process for when there are major changes to the workplace, such as redundancies.

The consultation process tells employers what they need to do if they decide to make changes to the business.

After a decision to make major changes has been made, the employer must as soon as possible:

  • notify affected employees about the proposed changes
  • provide clear information about the changes and their expected effects
  • discuss strategies to reduce negative effects on the employees
  • consider employee ideas or suggestions about the changes.

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

Redundancy of 15 or more employees

If a business is considering making 15 or more employees redundant, the employer must give Services Australia written notification of the proposed dismissals as soon as possible. This must happen before the employees are 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.

Failure to comply with these requirements may result in penalties.

For more information and access to a notification template, visit Services Australia – Redundancy information for employers.

Further support for redundant employees and their employers

Employers can provide additional support and resources to employees being made redundant as part of the consultation process.

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.

For more information about the services available, visit Related government sites.

Source reference for page: Fair Work Act 2009 sections 119, 385, 389, 530

Tools and resources

Related information

Tags
Ending employment (eg. final pay, notice)
Redundancy