What Is a Genuine Redundancy in Australia?

Restructuring is a normal part of running a business. Markets shift, technology changes and sometimes you need to streamline roles to stay competitive.

When roles are removed, it’s critical to make sure each dismissal meets the legal definition of a “genuine redundancy” in Australia. Get it right and you reduce risk, protect morale and move forward cleanly. Get it wrong and you could face unfair dismissal claims, underpayment issues and reputational damage.

In this guide, we’ll walk through what a genuine redundancy is, the exact steps employers should follow, and the documents you’ll want in place to stay compliant and minimise disputes.

Why Employers Need To Get Redundancy Right

Redundancies are about a job, not a person. If the role truly isn’t needed anymore, redundancy can be the right option. But if the decision is really about performance or conduct, redundancy isn’t appropriate and can expose you to claims.

From a compliance standpoint, you’ll want to be confident you can show:

• There was a business case to remove the role (operational changes, restructure, cost pressures, new systems, etc.).
• You consulted as required under any applicable modern award or enterprise agreement.
• You considered reasonable redeployment opportunities in your business or any associated entities.

If any of these elements are missing, the dismissal may be challenged. The Fair Work Commission will assess whether the dismissal was harsh, unjust or unreasonable under the Fair Work Act, including the factors outlined in section 387.

What Is A Genuine Redundancy Under Australian Law?

Under the Fair Work Act 2009 (Cth), a dismissal is a genuine redundancy if all three of the following apply:

1) The Job Is No Longer Required

The employer has decided the job is no longer required due to changes in operational requirements. Typical reasons include reorganisation, a downturn in work, merging teams, introducing new technology or outsourcing a function.

It’s the job that is redundant - not the person. If you remove a role and then quickly hire someone else to do substantially the same work, that will weigh against a finding of genuine redundancy.

2) You Complied With Any Consultation Obligations

If a modern award or enterprise agreement applies, you must follow its consultation clause. This usually includes notifying affected employees, discussing the changes, inviting feedback on measures to reduce adverse effects (for example, changes to hours), and genuinely considering that feedback before final decisions are made.

Failure to consult properly is a common - and avoidable - reason for redundancies being found not genuine.

3) Redeployment Was Not Reasonably Available

You must consider whether it would be reasonable to redeploy the employee within your business or an associated entity. Reasonableness depends on factors like the employee’s skills, location, pay and seniority, and whether training could be provided.

Keep notes of vacancies you considered and why redeployment wasn’t viable. This record can be crucial if your decision is challenged.

Genuine Redundancy Checklist For Employers

Use this practical checklist to help you navigate the process from planning through to final pay. Adjust it to your business size and the number of roles affected.

1. Build Your Business Case
   • Document the operational changes (restructure, cost savings, technology, outsourcing).
   • Map the duties of the affected role(s) and how those duties will be discontinued or redistributed.
   • Confirm the change is about the role, not individual performance or conduct.
2. Identify Applicable Industrial Instruments
   • Check if a modern award or enterprise agreement applies and locate the consultation clause.
   • Note any specific steps, timelines or templates required for consultation.
3. Plan and Conduct Consultation
   • Notify affected employees in writing that you’re proposing changes likely to result in redundancy.
   • Invite feedback, meet with employees and consider measures to mitigate impacts (retraining, part-time arrangements, alternative structures).
   • Genuinely consider the feedback before making final decisions - keep a paper trail of meetings and outcomes.
4. Assess Redeployment Options
   • Review vacancies across your business and any associated entities.
   • Consider reasonable training, location and pay adjustments.
   • Record outcomes of redeployment assessments (what was considered and why it wasn’t suitable).
5. Prepare Decision and Communications
   • Finalise your decision and prepare a clear, respectful redundancy letter.
   • Include termination date, notice or payment in lieu, redundancy pay (if applicable), and details about returning property and confidentiality obligations.
   • Decide whether a handover or garden leave is appropriate (and check any contract terms).
6. Calculate Notice, Redundancy and Final Pay
   • Confirm the correct notice period or use payment in lieu (and superannuation treatment).
   • Calculate redundancy pay based on service (unless an exemption applies).
   • Include accrued entitlements (annual leave, and long service leave where relevant) in final pay.
7. Support a Dignified Exit
   • Handle communications with care to protect employee dignity and team morale.
   • Provide employment records, certificates of service if requested and next steps for queries.
   • Consider whether a Deed of Release is appropriate in more complex scenarios.

If your situation is complex - for example, overlapping restructures, multiple awards, or potential redeployment across associated entities - getting tailored redundancy advice early can save time and reduce risk.

Redundancy Pay, Notice And Final Pay Obligations

Once you’ve decided the role is genuinely redundant and you’ve consulted properly, turn to the numbers. These are the most common pay items to get right.

Notice Or Payment In Lieu

Employees are entitled to a minimum notice period under the National Employment Standards (NES), based on continuous service and whether they are over 45 with at least two years’ service.

You can choose to have the employee work out their notice or provide payment in lieu (paying the full notice value instead of them working it). If you’re unsure which minimum applies, check your obligations with a quick refresher on calculating notice periods.

Redundancy Pay

Most full-time and part-time employees are entitled to redundancy pay under the NES based on continuous service, unless an exemption applies (e.g., small business employer with fewer than 15 employees, certain casuals, or where employment is for a limited time/seasonal project).

Use your records to determine service length and calculate the lump sum. As a sense-check tool, many employers run their figures through a redundancy calculator and then confirm with payroll. If you need a deeper dive into the formula, see our guide on how to calculate redundancy pay.

Accrued Entitlements And Final Pay

Don’t forget to include any accrued annual leave and, if applicable, long service leave in the final pay. Check relevant award or enterprise agreement terms in case there are additional amounts payable on termination.

Timing matters: many awards require final pay within a set period. Paying promptly reduces the risk of disputes and shows your commitment to doing the right thing.

Common Pitfalls That Make A Redundancy “Not Genuine”

Here are mistakes we often see - and how to avoid them.

• Skipping Consultation: If an award or enterprise agreement applies and you don’t follow its consultation steps, the redundancy may be found not genuine even if your business case is sound. Plan your timeline to include proper consultation before final decisions are made.
• Backfilling The Role: Advertising or hiring for the “redundant” role shortly after termination (or moving someone in to do substantially the same duties) undermines the argument that the job was no longer required.
• Targeting Performance Issues: If the real issue is performance or conduct, redundancy isn’t the right pathway. Use performance management, support plans and, where necessary, disciplinary procedures instead.
• Ignoring Redeployment: You must genuinely consider whether redeployment is reasonable within your business or associated entities. Keep records of your search and why options weren’t suitable.
• Unfair Selection Criteria: If multiple employees perform similar roles, be objective and transparent with your selection criteria (e.g., role overlap, skills match with future structure). Avoid discriminatory criteria or anything that appears targeted at an individual for non-operational reasons.
• Poor Communication: Abrupt notifications or inconsistent messaging can create distrust and prompt claims. Clear, respectful and timely communication goes a long way.

If a redundancy is challenged, the Fair Work Commission will look at overall fairness and process under section 387 of the Fair Work Act, including whether the employee had an opportunity to be heard and whether you followed a reasonable process.

Documents And Policies To Have In Place

Good paperwork protects your business, reduces ambiguity and helps demonstrate that your redundancy was genuine and fairly managed.

• Employment Contract: Ensure every staff member has a clear Employment Contract setting out notice, duties, confidentiality, IP and post-employment obligations (where appropriate). Clear terms make the process smoother.
• Redundancy And Consultation Letters: Written notices for proposed changes, consultation invitations, and final redundancy decisions help show compliance with award or agreement obligations.
• Policies: A redundancy or change-management policy can set expectations and guide managers on process, timelines and documentation.
• Termination Documents: Where appropriate, use a tailored suite of letters and checklists for termination steps, including return of property and final pay statements. Our Employee Termination Documents Suite is designed to streamline this stage.
• Deed Of Release (Where Appropriate): In more sensitive or complex exits, a deed can help both parties document a clean resolution of issues and protect confidentiality. For guidance on structure and risks, see our article on a Deed of Release.

If you’re unsure which documents are right for your situation, a short consult can help you choose the right pathway and ensure everything aligns with your award or enterprise agreement.

Frequently Asked Employer Questions

Can I Offer Redeployment On Different Terms?

Yes, you can consider reasonable redeployment even if the role has different duties, location or pay. What’s “reasonable” depends on the circumstances, including the employee’s skills and whether training can be provided. Offer the option in writing and keep a record of discussions and outcomes.

Do I Pay Superannuation On Notice In Lieu?

It depends on the components of the payment and your arrangements. Check your payroll settings and seek advice where needed. As a starting point, review your obligations for payment in lieu and ensure you’re capturing the correct items in final pay.

What If I’m A Small Business Employer?

Employers with fewer than 15 employees are generally exempt from redundancy pay under the NES, but you still need a genuine business case, proper consultation (if an award/EA applies), and correct notice and final pay. Always check any award or agreement for extra obligations.

Can I Make Someone Redundant During Probation?

You can restructure at any time, but the same principles apply: the role must be genuinely no longer required and, where required, you must consult and consider redeployment. Don’t use redundancy to sidestep performance processes - that’s a common source of disputes.

Key Takeaways

• A genuine redundancy requires three things: the job is no longer required, you consulted as required, and redeployment wasn’t reasonably available.
• Document your business case, follow any award or enterprise agreement consultation steps, and keep records of redeployment assessments.
• Get the numbers right: notice or payment in lieu, redundancy pay (if applicable), and all components of final pay.
• Avoid common pitfalls like backfilling the role, skipping consultation or using redundancy to manage performance concerns.
• Strong paperwork - from your Employment Contract to a practical termination documents suite - reduces ambiguity and helps defend your decisions.
• If your restructure is complex or involves multiple awards or entities, targeted redundancy advice can de‑risk the process and save time.

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