Alex is Sprintlaw's co-founder and principal lawyer. Alex previously worked at a top-tier firm as a lawyer specialising in technology and media contracts, and founded a digital agency which he sold in 2015.
Contents
If redundancy is on your radar-whether you’re managing a restructure or you’ve been told your role is at risk-it helps to understand exactly what “made redundant” means under Australian law.
Handled well, redundancy can be a respectful, legally compliant transition. Handled poorly, it can lead to disputes, underpayment claims and real harm to morale.
In this guide, we unpack the made redundant meaning in clear terms, outline genuine redundancy requirements, and walk through practical steps, rights and entitlements for both employers and employees in Australia.
What Does “Made Redundant” Mean In Australia?
Redundancy happens when an employer no longer requires a particular job to be done by anyone. It’s about the role-not the employee’s performance or conduct.
Common drivers include restructuring, downsizing, business closure, relocation, or technology changes that remove the need for certain tasks.
Being “made redundant” is different from dismissal for misconduct or poor performance. In redundancy, the position disappears. That distinction matters because redundancy triggers specific obligations around notice, consultation and, in many cases, redundancy pay.
When Is A Redundancy “Genuine”?
Under Australian employment law, a redundancy needs to be “genuine”. In practice, that means three things work together.
1) The Job Is No Longer Required
The employer genuinely decides the role is no longer needed (for example, due to a restructure or site closure). Replacing someone in the same role soon after can call genuineness into question.
2) Consultation Requirements Are Met
If an applicable modern award or enterprise agreement covers the employee, the employer must consult as those instruments require. Consultation is not based on headcount-it turns on whether an award or enterprise agreement applies and what it says about consultation before major workplace change.
3) No Reasonable Redeployment Is Available
The employer must consider whether there are reasonable redeployment options within the business or any associated entities. Reasonableness depends on factors like location, skills, pay level and the seniority of the role.
If any of these elements are missing, the redundancy may not be genuine. That can expose the employer to an unfair dismissal claim, particularly where the consultation duty wasn’t followed or there was an obvious suitable vacancy. For an employer’s perspective on fairness considerations, see a high‑level overview in section 387 of the Fair Work Act.
Your Rights If You’re Made Redundant
Facing redundancy is stressful, but knowing your entitlements helps you plan your next step with confidence.
Notice (Or Payment In Lieu)
You’re entitled to written notice of termination based on your length of service (unless serious misconduct applies). Employers can either require you to work the notice period or pay you instead of notice. If you’re weighing up options at the end of your employment, this overview of payment in lieu of notice explains the basics.
Redundancy Pay
Most permanent employees (not casuals) are entitled to redundancy pay under the National Employment Standards, scaled to years of continuous service. You can estimate entitlements using the Redundancy Calculator.
Consultation
If a modern award or enterprise agreement applies, you’re entitled to a genuine consultation before a final decision is made-information about the change, an opportunity to ask questions, and a discussion about measures to avert or mitigate the impact, including redeployment.
Redeployment Consideration
Your employer should consider reasonable redeployment across the business or associated entities. If you accept “other acceptable employment,” your redundancy pay can be reduced-but that reduction isn’t automatic. The employer would need to apply to the Fair Work Commission to vary redundancy pay in specific circumstances, such as when acceptable alternative employment is obtained or the employer cannot pay.
Final Pay And Other Entitlements
Accrued but unused annual leave is paid out on termination, and other entitlements may apply depending on your location and service.
- Annual leave payouts are part of your final pay-see a breakdown of annual leave on termination.
- Pro rata long service leave can be triggered by termination in some states and territories-our Long Service Leave Calculator is a helpful starting point.
Unfair Dismissal Risks
If the redundancy isn’t genuine (for example, no consultation where required or reasonable redeployment was available), you may be able to challenge the termination. Act quickly-time limits apply.
Employer Obligations And A Practical, Compliant Process
If you’re an employer planning a restructure, a clear process protects your people and reduces legal risk. Here’s a practical roadmap.
Step 1: Build A Genuine Business Case
Document the commercial reasons the role is no longer required (e.g. duplication after a merger, site closure, automation), the roles affected, and why alternatives (like role redesign) won’t meet business needs.
Step 2: Identify Coverage And Consultation Duties
Check if affected employees are covered by a modern award or enterprise agreement and follow the specific consultation procedures in that instrument. Consultation should occur before a final decision and cover the nature of the change, likely effects, and measures to mitigate harm.
Step 3: Explore Redeployment
Map vacancies across your business and associated entities. Assess skill match, location, hours, and remuneration. Keep notes of searches, conversations and decisions-contemporaneous records matter.
Step 4: Communicate Clearly (And Compassionately)
Hold a consultation meeting, then confirm key points in writing. If the decision proceeds, issue a termination letter setting out the last day, notice arrangements, redundancy pay (if applicable) and the process for returning property and final pay.
Step 5: Calculate Final Entitlements
Calculate notice (or pay in lieu), redundancy pay (if applicable), accrued leave, and any outstanding amounts. For complex scenarios or to avoid errors, it can help to walk through a structured checklist for calculating final pay.
Step 6: Provide Required Documents
Where requested, issue an Employment Separation Certificate so former staff can access support. Here’s a quick explainer on employer separation certificates.
Step 7: Offer Practical Support
Where feasible, provide references, career transition services or EAP support. Small gestures go a long way for team culture and brand reputation.
Common Pitfalls To Avoid
- Consulting after a final decision is made (consultation must be genuine and timely).
- Overlooking redeployment in associated entities.
- Assuming headcount determines consultation duties-coverage by an award or enterprise agreement is what matters.
- Underpaying redundancy or notice because of misapplied service calculations.
If you’re unsure at any stage, our legal experts can help you plan and document a compliant process.
Small Business And Redeployment Nuances
Some rules work differently for small business employers, while other obligations still apply in the usual way.
Small Business Redundancy Pay
Under the National Employment Standards, employers with fewer than 15 employees are generally not required to pay redundancy pay (unless a contract, policy, enterprise agreement or industry instrument provides otherwise). The headcount test includes all employees of associated entities, so make sure you count correctly.
Consultation Still Depends On Coverage
Small business status doesn’t remove consultation obligations if an applicable modern award or enterprise agreement requires it. Always check the instrument and follow the process it sets out.
Varying Redundancy Pay For “Other Acceptable Employment”
Where an employee is offered and accepts other acceptable employment-or where an employer can’t pay-an employer can apply to the Fair Work Commission to reduce redundancy pay. This is not automatic; it requires an application and a decision by the Commission based on the circumstances.
Considering Alternatives To Redundancy
Before landing on redundancies, you may choose to consider genuine alternatives such as reduced hours, job sharing or temporary leave arrangements. If you go down that path, make sure any change to hours or status is lawful and documented-our guide to reducing employee hours outlines key compliance steps.
Alternatives, Risks And End‑Of‑Employment Entitlements
Redundancy isn’t always the only option. And if you do proceed, it’s critical to get the end‑of‑employment details right.
Alternatives You Can Assess
- Redeployment or role redesign: Moving employees to suitable vacancies or combining roles if that still meets business needs.
- Reduced hours or days: With proper consultation and documentation where required.
- Voluntary redundancies: Inviting expressions of interest can reduce disruption, though selection must remain fair and non‑discriminatory.
- Leave without pay: Temporary arrangements for short downturns can be considered alongside other measures.
Risks If You Get It Wrong
- Unfair dismissal claims: Where the redundancy is not genuine (e.g. no consultation when required, reasonable redeployment ignored).
- Underpayment claims: If redundancy pay, notice or leave payouts are miscalculated.
- Adverse action claims: If selection is influenced by unlawful reasons (such as discrimination or the exercise of workplace rights).
Final Entitlements To Consider
- Notice/pay in lieu: Based on continuous service and any contractual terms-see the overview of payment in lieu of notice.
- Redundancy pay: Where applicable under the NES or a binding instrument. Estimate using the Redundancy Calculator.
- Accrued annual leave: Paid out in full on termination, with guidance in our article on annual leave on termination.
- Long service leave: Pro rata may apply depending on state or territory; the Long Service Leave Calculator is a useful starting point.
If the redundancy coincides with personal leave or you’re navigating overlapping entitlements, this quick explainer on redundancy and sick leave covers common scenarios.
Key Takeaways
- Being “made redundant” means the job itself is no longer required to be performed by anyone-it’s not about performance or conduct.
- A redundancy is genuine when the job is no longer needed, any required consultation under an applicable award or enterprise agreement has occurred, and there are no reasonable redeployment options.
- Employees are often entitled to notice (or pay in lieu), redundancy pay (with some exceptions) and payout of accrued leave; time limits apply if you wish to challenge a non‑genuine redundancy.
- Small business employers are generally exempt from NES redundancy pay, but consultation obligations can still apply if an award or enterprise agreement requires it.
- Employers should document the business case, consult properly, consider redeployment across associated entities, and calculate final entitlements accurately to minimise risk.
- Where acceptable alternative employment is obtained, an employer can apply to the Fair Work Commission to vary redundancy pay-this isn’t automatic.
If you’d like a consultation on managing redundancy-whether for your business or as an employee-you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no‑obligations chat.
