A redundancy occurs when an employee’s role is no longer required to be performed by anyone else in the business. This may be the result of operational requirements, such as new technologies replacing the need for the employee, business restructures, or the business may have become insolvent or bankrupt.
Before making an employee redundant, the employer must consult the employee and provide the employee with the reasons as to why the employee’s position is no longer required and consider redeployment. In circumstances where the employee has been genuinely made redundant, the employee is not able to make an unfair dismissal claim.
Signs that a redundancy is not “genuine” include:
(a) the employer still requires the employee’s job to be performed and/or hires someone else to fill the role;
(b) the employer has not followed the requirements under the relevant award, enterprise agreement or any other registered agreement; or
(c) it was reasonable for the employer to find work for the employee in another area of the business.
If the employer is a small business employer (that is, it employs less than 15 people) then the requirement to pay redundancy under the Fair Work Act 2009 does not apply, although an Award or the employment contract might include such a requirement (see section 121).
Amount of redundancy pay
The amount of the redundancy pay equals the total amount payable to the employee for the redundancy pay period worked out using the following table at the employee’s base rate of pay for his or her ordinary hours of work:
|Employee’s period of continuous service with the employer on termination||Redundancy pay period|
|At least 1 year but less than 2 years||4 weeks|
|At least 2 years but less than 3 years||6 weeks|
|At least 3 years but less than 4 years||7 weeks|
|At least 4 years but less than 5 years||8 weeks|
|At least 5 years but less than 6 years||10 weeks|
|At least 6 years but less than 7 years||11 weeks|
|At least 7 years but less than 8 years||13 weeks|
|At least 8 years but less than 9 years||14 weeks|
|At least 9 years but less than 10 years||16 weeks|
|At least 10 years||12 weeks|
If you are concerned that a redundancy was not genuine, you may be able to make an unfair dismissal claim. For a better understanding of the laws surrounding redundancy and unfair dismissal, please contact one of our employment lawyers on (02) 9232 8033 or e-mail email@example.com.