Everything You Need To Know About Redundancy

Redundancy of staff can be a reality faced by businesses both big and small as they encounter changes in operation, structure or growth. The term “redundancy” describes a situation where an employer no longer requires an employee’s role to be filled in the business, or the business becomes insolvent or bankrupt.

An employee’s role may become redundant as a result of a business utilising new technology or machinery, a reduced rate of sales or business growth, a change in location, or a business restructure.

It is essentially when the job itself, not the employee, becomes redundant.

What Is A Genuine Redundancy?

It is important that an employer ensures that a redundancy is genuine as, if they don’t, the redundant employee may make an unfair dismissal claim  against the employer.

A redundancy is considered genuine when the person’s job no longer needs to be done, and the employer has followed the relevant consultation requirements set out in the award, enterprise agreement or other registered agreement.

A redundancy is not genuine if the employer:

• Still requires the role to be filled;
• Has failed to consult with the employee about the redundancy, as required under the  relevant award or registered agreement; or
• Could have moved the employee to another position in the employer’s business.

Under all awards and registered agreements, there are processes employers need to follow when their business is undergoing big changes which may lead to redundancy. A particularly important process is consulting with employees affected by the changes. Employees must be informed of these changes, including being given information about what the changes involve and how they may be affected. Employers must also provide employees with the opportunity to share their suggestions about the change.

Redundancy Pay And Entitlements

The Australian National Employment Standards set out how much an employer is required to pay an employee if they are made redundant.

Redundancy pay may be given to an employee if:

• A workplace instrument (e.g. an award agreement) applies to the employee and contains redundancy pay entitlements
• The employer employs 15 or more people, and the employee has worked for the employer for more than 12 months

However, an employer won’t be required to provide redundancy pay if:

• The employee has worked for the employer for less than 12 months
• The employer is a small business
• The employee has engaged in serious misconduct
• The employee was employed on a casual basis
• The employee was employed for set role or finite period
• An industry-specific redundancy scheme in a modern award applies to the employee’s industry

An employee may reduce their employer’s redundancy pay if the employer makes another employment arrangement for the employee, or cannot meet the redundancy pay due to the employee.

How Much Redundancy Pay Is Payable?

Employees will receive redundancy pay based on how long they have continuously worked with their employer. It is calculated on their usual base rate.

What To Do If You’ve Been Made Redundant

Being made redundant is likely to be an extremely challenging event in a person’s working life. You may be faced with losing the job you enjoyed, financial instability, a loss of confidence, and the stress of finding a new job.

If you think that your redundancy was not genuine or was unlawful, seek assistance and feel free to get in touch with us to obtain advice on your rights. Or, if you need help effectuating a legal and sensitive redundancy and preparing all the documents you’ll need, we’re also here to help.

Adam Watters

Adam is a legal intern at Sprintlaw. He is currently completing his double degree in Law and Commerce at Macquarie University. With interests in contracts and accounting, he is looking to complete further study and gain experience in the area of commercial law.

Embeth Sadie

Embeth is a senior lawyer at Sprintlaw. Having previously practised at a commercial litigation firm, Embeth has a deep understanding of commercial law and how to identify the legal needs of businesses.