How To Write A Redundancy Letter Under Fair Work in Australia

Making roles redundant is one of the toughest decisions you’ll make as a business owner. It’s also an area where getting the process and paperwork right really matters.

If a redundancy isn’t handled properly under the Fair Work system, you could face claims for unfair dismissal or underpayment - even if the business reasons were genuine.

In this guide, we’ll walk through when you need a redundancy letter, what it must include, and how to follow a fair, compliant process so you can move forward with confidence.

What Is A “Genuine Redundancy” Under Fair Work?

Under Australia’s Fair Work system, a dismissal is a genuine redundancy if three key things are true:

• The job is no longer required to be done by anyone due to changes in your operational needs (for example, a restructure, technology change, or downturn in demand).
• You complied with any consultation obligations in an applicable award or enterprise agreement (meeting with the employee, considering their input, and exploring alternatives).
• It wasn’t reasonable to redeploy the employee within your business or any associated entity.

If these elements aren’t met, the employee may be able to challenge the dismissal as unfair. Your letter should reflect these points and show the steps you’ve taken.

Redundancy pay is also part of the National Employment Standards (NES) for eligible employees, however small businesses with fewer than 15 employees may be exempt from redundancy pay (but not from notice, consultation and other obligations).

When Do You Need A Redundancy Letter?

You’ll usually give a redundancy letter after meaningful consultation and once you’ve decided the role will be made redundant. The letter confirms the decision in writing and sets out the key details: the reason, consultation steps, notice, final payments and practical next steps.

Situations where you’ll need a redundancy letter include:

• Restructuring that removes one or more positions.
• Consolidating teams or functions so work can be performed differently or by fewer people.
• Closing a department, location or the entire business.

It’s best practice to hand the letter to the employee in a meeting (with a support person if they wish) and then follow up by email.

Step-By-Step: The Redundancy Process For Small Businesses

Following a clear process helps you stay compliant and treat people fairly. Here’s a practical roadmap you can adapt to your business.

1) Plan The Restructure

• Document the business reasons (e.g. budget cuts, new software, drop in sales).
• Identify roles affected - and why the duties are no longer required.
• Consider alternatives to redundancy (retraining, reduced hours, job-share, natural attrition).

2) Check The Rules That Apply

• Confirm any applicable award or enterprise agreement and its consultation clause.
• Check service length and redundancy pay eligibility under the NES.
• Work out notice requirements or whether you’ll use payment in lieu of notice.

3) Consult In Good Faith

• Meet with the employee to share the proposed change, reasons and impacts.
• Invite feedback and consider alternatives, including redeployment options.
• Keep notes of meetings and the options you assessed.

4) Assess Redeployment

• Identify any available positions within your business or associated entities.
• Assess suitability (skills match, location, pay) and discuss options with the employee.
• Document your assessment and the outcome.

5) Decide And Confirm In Writing

• Hold a final meeting to communicate the decision.
• Provide the redundancy letter confirming the reasons, notice, last day, and entitlements.
• Explain the support available (e.g. references, outplacement, EAP) and next steps.

6) Calculate And Pay Final Entitlements

• Calculate notice or payment in lieu, redundancy pay (if applicable), accrued annual leave and any long service leave.
• Process final pay on time and provide an itemised payslip.
• If you’re unsure on timing or inclusions, follow this guide to calculating final pay.

7) Keep Your Records

• Retain your business case, consultation notes, redeployment assessment and the signed letter.
• Good records are your best defence if the decision is later reviewed.

What To Include In A Redundancy Letter (Employer Checklist)

Your letter should be clear, respectful and complete. Use simple language and cover the essentials.

Core Elements

• Heading and Date: A clear subject line, e.g. “Notification of Redundancy” with the date.
• Reason For Redundancy: A brief, business-based explanation (e.g. restructure, decline in demand, technology change).
• Consultation Summary: A short note about when you consulted and what you discussed.
• Redeployment Consideration: A statement that you considered suitable positions and why redeployment wasn’t reasonable.
• Notice Period And Last Day: Set out the required notice, the final date of employment, and whether notice will be worked or paid in lieu.
• Redundancy Pay: State the amount (if applicable) and how it was calculated under the NES or a more generous policy/industrial instrument.
• Accrued Entitlements: Confirm payment of accrued annual leave and, if applicable, long service leave.
• Company Property And Handover: Outline return of equipment, access removal and handover expectations.
• Support Offered: Mention references, outplacement or EAP if available.
• Contact Details: Who to contact with questions about pay or the transition.

Optional Add-Ons (Depending On Your Situation)

• Payment In Lieu: If you’ll pay some or all notice instead of having it worked, reflect this clearly and ensure it aligns with your payment in lieu of notice obligations.
• Ex-Gratia Payment: Any additional amount offered on a discretionary basis (if relevant).
• Confidentiality/Non-Disparagement: If you are offering extra benefits, consider documenting terms separately via a separation agreement and, where appropriate, a Deed of Release.
• Reference To Small Business Exemption: If you employ fewer than 15 people and redundancy pay is not required, state the basis briefly and respectfully.

Tone And Delivery

• Keep the tone professional and empathetic - avoid blame or speculation.
• Deliver the letter in a private meeting and then provide a copy via email.
• Avoid legal jargon; plain English helps employees understand the decision and next steps.

How To Calculate Notice, Redundancy Pay And Final Pay

Before you finalise the letter, work out an accurate breakdown of entitlements. You’ll typically need to calculate:

• Notice: Based on service length and age (and any award/EA terms). Use your policy or follow the NES - here’s a practical explainer on notice periods.
• Redundancy Pay: If applicable, the NES sets out weeks of pay by service. A quick sense-check with a redundancy calculator can help, but always confirm against your award/EA and the NES.
• Accrued Leave: Pay out accrued annual leave and, if relevant, long service leave in accordance with state/territory law.
• Other Payments: Owing commissions, TOIL, or agreed ex‑gratia amounts.

Add a simple table in the letter (or attach a payslip-style breakdown) showing each component, tax treatment where relevant, and the total. If you are unsure about inclusions, this guide to calculating final pay is a useful reference.

Common Mistakes To Avoid (And How To Stay Compliant)

Redundancies can become messy - and expensive - if the Fair Work steps are skipped. Here are pitfalls we see and how to avoid them.

1) Skipping Consultation

Even when the business case feels obvious, awards and enterprise agreements usually require consultation. Share the proposal, invite feedback, and genuinely consider alternatives. Document each step and summarise it in your letter.

2) Not Assessing Redeployment

Genuine redundancy requires that redeployment wasn’t reasonable. Check available roles (including at associated entities), assess skills match and pay, and discuss options with the employee. Include a short summary of this process in the letter.

3) Vague Reasons

Explain the business changes in clear, business-focused language. Avoid any references to performance or conduct - those are different processes and can undermine the genuine redundancy basis.

4) Incorrect Entitlements

Underpaying notice, redundancy pay or accrued leave is a common risk. Double-check service dates, any higher contractual entitlements, and whether you’re a small business exempt from redundancy pay. If you’re uncertain, consider tailored redundancy advice to sanity-check your calculations.

5) Using A One-Size-Fits-All Template

Every award/EA and business structure is different. A letter that doesn’t reflect your consultation steps, redeployment assessment and correct entitlements can create avoidable disputes. Where you need a robust pack (letters, scripts and checklists), a tailored Redundancy Document Suite can save time and reduce risk.

6) Forgetting The Upstream Documents

Clarity at the start of employment makes the end smoother. Having a current Employment Contract and up-to-date policies helps you determine notice, benefits and obligations quickly and consistently.

Practical Sample Structure You Can Adapt

Below is a simple structure many employers use. Adjust the language to your circumstances and the applicable award/EA.

• Introduction: State the decision to make the position redundant, effective on the last day of employment.
• Business Reason: Briefly describe the operational change leading to the redundancy.
• Consultation: Note the dates of consultation meetings and a short summary of matters discussed.
• Redeployment: Confirm that you considered suitable alternative roles and why redeployment was not reasonable.
• Notice And Last Day: Set out the notice period and last day, and whether any period will be paid in lieu.
• Entitlements: List redundancy pay (if applicable), accrued leave and other amounts payable, with totals.
• Next Steps: Return of property, access removal, and who to contact with questions.
• Support: Any references, EAP or outplacement services available.
• Closing: Thank the employee for their contribution and provide contact details for queries.

Frequently Asked Employer Questions

Do I Need To Offer A Separation Agreement?

Not always. For many straightforward redundancies, the letter plus final pay breakdown is enough. If you’re offering additional benefits beyond legal minimums (for example, ex‑gratia payments) in exchange for a release of claims, consider using a short separation agreement or a formal Deed of Release.

Can A Redundant Employee Work Out Their Notice?

Yes, unless there is a good reason for payment in lieu (for example, operational needs or to support a smoother transition). If you choose payment in lieu, make sure the letter explains it and your calculations align with your obligations on payment in lieu of notice.

How Do I Handle Multiple Redundancies?

Apply objective, defensible selection criteria (e.g. role necessity, skills mix, qualifications) and avoid discriminatory factors. Consult with all affected employees, assess redeployment fairly, and issue tailored letters. When managing a larger change, many employers use a structured Redundancy Document Suite to keep messaging and compliance consistent.

Key Takeaways

• Redundancy is “genuine” when the role is no longer required, you’ve consulted properly and redeployment isn’t reasonable.
• A strong redundancy letter clearly explains the business reason, summarises consultation, sets out notice and the last day, and itemises final entitlements.
• Get your calculations right - confirm notice, redundancy pay (if applicable) and accrued leave, and follow best practice for notice periods and final pay.
• Avoid common pitfalls: skipping consultation, overlooking redeployment, vague reasoning, or using a generic template that doesn’t fit your award/EA.
• Where you’re offering extra benefits, consider documenting terms with a separation agreement or Deed of Release to finalise the relationship cleanly.
• Putting the right documents and process in place - including an up-to-date Employment Contract - reduces risk and protects your business.

If you’d like a consultation on drafting a redundancy letter or managing the redundancy process in your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.