How To Handle Redundancy During Maternity Leave In Australia

Needing to restructure while a team member is on maternity leave can feel daunting. You want to do the right thing by your employee and also protect your business.

The good news is that Australian law allows redundancies during parental leave in certain circumstances. However, you must follow a careful process to ensure the redundancy is “genuine”, comply with consultation and redeployment obligations, and get the payments right.

In this guide, we’ll step through what a lawful redundancy looks like during maternity leave, the practical process to follow, and common pitfalls to avoid. Our goal is to help you manage change with confidence and fairness.

What Is A “Genuine Redundancy” Under The Fair Work Act?

Before anything else, confirm the decision is a genuine redundancy. Under the Fair Work Act, a redundancy is genuine if:

• The employer no longer needs the person’s job to be done by anyone (for example, because of restructure, new technology or downturn).
• The employer complied with any applicable consultation obligations in a modern award or enterprise agreement.
• It wasn’t reasonable to redeploy the employee within the employer’s business or an associated entity.

These elements are set out in section 389 of the Fair Work Act. If you’re unsure how the test applies to your situation, it helps to revisit the genuine redundancy criteria in plain English and map them to your restructure rationale and evidence.

Importantly, redundancy is about the role, not the person. If the duties are still required and will simply be performed by someone else, or if performance concerns are driving the decision, it’s unlikely to be a genuine redundancy.

Can You Make Someone Redundant While They’re On Maternity Leave?

Yes, you can in Australia-but only if it is a genuine redundancy. You must also ensure your decision is not influenced by prohibited reasons (e.g. pregnancy, parental leave, or a temporary absence due to illness or injury), which are protected under the Fair Work Act’s general protections and anti-discrimination laws.

In practice, this means:

• You need a clear, documented business case showing why the role is no longer required.
• You must consult, even if the employee is on unpaid parental leave. Awards/agreements still apply, and “keeping in touch” provisions can facilitate consultation.
• You must actively consider redeployment options across your business and associated entities, and be able to show why suitable roles were or weren’t available.

If the redundancy is genuine and properly managed, you can lawfully end the employment during maternity leave. If not, you risk unfair dismissal or adverse action claims.

Step-By-Step: How To Manage A Redundancy During Parental Leave

Below is a practical, employer-focused process that aligns with the Fair Work Act obligations and helps you minimise risk.

1) Build Your Business Case And Evidence

Start by documenting the reason the role is no longer required-organisational restructure, role consolidation, technology changes, budget cuts or project closure.

Collect evidence that supports your rationale (restructure charts, budget forecasts, board minutes, strategic plans). Having a clear paper trail is vital if your decision is later scrutinised.

2) Identify Consultation Duties And Plan Communications

Check the applicable modern award or enterprise agreement for consultation requirements. These typically require you to notify affected employees of major workplace changes, provide relevant information, and genuinely consider their views.

Because the employee is on parental leave, plan how you’ll consult respectfully and practically. “Keeping in touch” days can help schedule discussions without breaking the continuity of leave. Offer written information first, then a meeting by phone or video at a time that suits the employee’s circumstances.

3) Explore Redeployment (Across Your Business And Associated Entities)

Assess whether there are any suitable alternative roles now or reasonably foreseeable. Consider the employee’s skills, pay level, location and status. You’re expected to look across your entire organisation and associated entities, not just the immediate team.

If something suitable exists, offer it in writing and allow reasonable time for a response. If there’s no suitable role, keep a record of what you considered and why options weren’t viable. This redeployment step is essential to a genuine redundancy.

4) Provide Written Notice And Explain Entitlements

When the decision is final, issue a termination letter that clearly sets out the redundancy, the effective date, notice arrangements, and the payments owed. If you won’t have the employee work (which is common during parental leave), you can provide payment in lieu of notice in accordance with the National Employment Standards (NES) and any applicable award or agreement.

Include contact details for questions, and offer support (e.g. references when appropriate). Where appropriate, you might also consider using an Employee Separation Agreement to document mutual obligations and support a respectful exit.

5) Calculate And Pay Redundancy Entitlements Correctly

Redundancy pay under the NES depends on years of continuous service and whether any exemptions apply (e.g. small business employers with fewer than 15 employees are generally exempt). You’ll also need to settle unused annual leave and long service leave per the relevant state or territory rules.

We cover the details on payments below, but the big picture is: get the numbers right, pay on time, and clearly itemise everything in the final payslip and termination letter.

6) Keep Your Documentation In Order

Your file should show the entire decision-making process-business case, consultation steps, redeployment assessment, notices issued and payments made. Having the right templates and letters at hand makes this much easier, which is where a tailored Redundancy Document Suite can save time and reduce risk.

What Should You Pay On Redundancy (Notice, Redundancy Pay, Super, Leave)?

Redundancy during maternity leave doesn’t “turn off” your NES obligations. You need to consider each component carefully.

Notice (Or Payment In Lieu)

• Employees are entitled to minimum notice under the NES based on service, or you can provide payment in lieu of notice.
• If an employee is on parental leave, notice is commonly paid in lieu. Confirm if any award or enterprise agreement sets different rules.

Redundancy Pay

• Most employees (other than small business employees, casuals and other limited exceptions) are entitled to redundancy pay under the NES.
• Service for redundancy pay is based on “continuous service”. Periods of unpaid parental leave do not break service, but generally don’t count as service for the purpose of calculating the amount. Check your specific circumstances carefully.
• An award or agreement cannot undercut NES redundancy pay, but it can add to it.

Accrued Leave

• Pay out accrued but unused annual leave.
• Long service leave is paid per state/territory laws and often includes pro-rata entitlements in certain circumstances.
• Unpaid parental leave itself is not paid out.

Superannuation

• Super is typically paid on ordinary time earnings (OTE). Some termination components attract super while others don’t. It’s best to confirm by reviewing your obligations around superannuation on termination payments.

Other Payments

• Any contractual benefits, incentive arrangements or commissions should be reviewed in line with the employment contract and policy wording.
• If offering an additional ex gratia amount, consider documenting the arrangement and any conditions in a separation agreement.

How Does Parental Leave Affect Consultation And Redeployment?

Parental leave status doesn’t remove your consultation or redeployment obligations. Employers should make genuine efforts to keep the employee informed and involved in the process.

• Consultation: Provide timely written information about the proposed change, its effects, and invite feedback. Offer a meeting via video or phone if preferred by the employee, and consider any suggestions in good faith.
• Redeployment: Actively explore suitable roles across your group. Consider reasonable adjustments or training that would make a role suitable, especially where skill gaps are modest.
• Return-to-Work Rights: If the employee’s pre-parental leave position still exists, they have a right to return to it or an available equivalent. If the position itself is genuinely redundant, document why and how redeployment was considered.

Having a clear, accessible Parental Leave Policy can help your team understand expectations around communication, keeping-in-touch days and return-to-work planning-long before any restructure arises.

Common Pitfalls To Avoid (And How To De-Risk Your Process)

Here are the mistakes we most often see-and how to steer clear of them.

• Confusing performance issues with redundancy: If performance is the driver, follow a performance management pathway-not redundancy. A role that still exists and is being filled by others is unlikely to meet the redundancy test.
• Weak or undocumented business rationale: Keep a clear paper trail of why the role is no longer needed. Decision notes, org charts and financials can be critical if there’s a dispute.
• Skipping consultation: Even on parental leave, awards/agreements require consultation. Provide information in writing, offer a meeting, and genuinely consider feedback.
• Not exploring redeployment: A genuine redundancy requires you to consider suitable roles across your business and associated entities. Record what you explored and why roles weren’t suitable.
• Miscalculating entitlements: Double-check notice, redundancy pay, leave and super. If in doubt, get tailored redundancy advice before finalising payments.
• Poor communication: Be empathetic and clear. Provide a well-drafted termination letter and consider a respectful separation agreement where appropriate.
• Missing or outdated templates: Using generic or outdated letters increases risk. A tailored Redundancy Document Suite keeps your process compliant and consistent.

Frequently Asked Questions From Employers

What if we’re a small business-do we owe redundancy pay?

Employers with fewer than 15 employees are generally exempt from NES redundancy pay. However, notice and accrued leave still apply, and you must still meet the genuine redundancy test, consultation and redeployment duties. Always check any applicable award or enterprise agreement.

Can we wait until after maternity leave to make the role redundant?

You can’t delay a restructure decision purely to avoid engaging during leave. If the role is genuinely redundant now, follow the steps and consult appropriately during leave. If the restructure isn’t yet certain, keep your planning transparent and communicate at the right time.

Do we have to supercharge redeployment options because the employee is on leave?

You must take redeployment seriously for every employee facing redundancy. Parental leave doesn’t increase the legal threshold, but practically you should be thorough and considerate in exploring options and timing.

What should go in the termination letter?

The letter should identify the redundancy reason, the effective date, notice arrangements (or payment in lieu), a breakdown of entitlements and when they’ll be paid, and who to contact with questions. Using a consistent, high-quality template is good practice.

Should we offer extras, like outplacement or ex gratia?

That’s a business choice. Some employers offer additional support to recognise service and smooth the transition. If you do, document it clearly-often within a separation agreement-which can also finalise confidentiality and return-of-property requirements.

Key Takeaways

• You can lawfully make a role redundant during maternity leave if it is a genuine redundancy and you meet consultation and redeployment obligations.
• A clear business case, careful consultation and documented redeployment efforts are essential to reduce unfair dismissal and adverse action risks.
• Get the payments right-notice (or payment in lieu), redundancy pay (subject to any small business exemptions), leave and the correct treatment of superannuation on termination payments.
• Use strong documents-consider a tailored Redundancy Document Suite and, where appropriate, a well-drafted Employee Separation Agreement.
• Proactive policies help-setting expectations early with a clear Parental Leave Policy supports fair communication and return-to-work planning.
• If you’re unsure whether your situation meets the genuine redundancy test, get advice before you act.

If you’d like a consultation on managing redundancy while an employee is on maternity leave, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.