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Redundancy – what employers need to know

It’s about the position, not the person
A genuine redundancy is about the job, not about the person. An employee’s actions do not cause redundancy: it is defined by a position or duties no longer being required in a business.

The importance of the word “genuine”
Section 389 of the Fair Work Act defines the meaning of “genuine redundancy”:

  • the person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and
  • the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.

Redundancy, redeployment and retrenchment: same same or different?
An employer makes a position redundant when its duties are no longer required to be done by anyone. Once the position is redundant, the employer performing those duties may either be redeployed (given another job) or retrenched (lose their job and not be offered another).

What is not a redundancy?
A dismissal is not a genuine redundancy if the employer:

  • still needs the employee’s job to be done by someone (e.g. hires someone else to do the job)
  • has not followed relevant requirements to consult with the employees about the redundancy under an award or registered agreement or
  • could have reasonably, in the circumstances, given the employee another job within the employer’s business or an associated entity.

Redundancy pay: who gets it?
Under section 119 of the National Employment Standards, an employee may be entitled to redundancy or severance pay if any of the following applies:

  • a workplace instrument (e.g. an award or agreement) that applies to the employee contains redundancy pay entitlements
  • the employee works for an employer that employs 15 or more employees and has more than 12 months continuous service (some exceptions apply).

Redundancy pay: who doesn’t get it
Some employees don’t get redundancy payments when their job is made redundant. This includes:

  • employees whose period of continuous service with the employer is less than 12 months
  • employees employed for a stated period of time, an identified task or project or a particular season
  • employees terminated because of serious misconduct
  • casual employees
  • trainees engaged only for the length of the training agreement
  • apprentices

Some small businesses don’t have to pay redundancy pay when making an employee redundant.

While the concept around redundancy is simple (providing you know where to look for the right information), the risks and emotions in dealing with redundancy are often challenging for employers to manage. Bare Bones Consulting takes pride in navigating clients through the maze of employment legislation, redundancy obligations and alternatives to ensure you do the right thing…for your business and your people. Contact us here or give us a call for a chat and a coffee…be confused no more!

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