Redundancy, and whether yours was genuine

The job, not the person

The legal test looks at the job rather than the employee. A redundancy is genuine where the employer no longer requires that job to be performed by anyone because of changes in the operational requirements of the business. What that excludes is instructive: a restructure that renames the role and hires someone else to do the same work is not a redundancy, and neither is a performance problem dressed as one. It is not fatal that duties are absorbed by remaining staff - that is a common and legitimate restructure - but it is fatal if the position substantially continues.

Consultation is an obligation, not a courtesy

Most modern awards and enterprise agreements contain a consultation term that is triggered when an employer makes a definite decision to make major changes likely to have significant effects on employees. It generally requires the employer to notify affected employees, discuss the changes and their effects, consider matters raised, and provide relevant information in writing. Consultation done properly happens before the decision on who goes is finalised, and it is documented. Announcing a completed decision at a meeting and calling it consultation is the most common way an otherwise sensible redundancy becomes challengeable.

Redeployment

The employer must show that redeployment would not have been reasonable. That question is not limited to identical roles or to the employing entity: it extends to the enterprise of an associated entity, and it takes account of roles the employee could perform with a reasonable period of training. Employers who never turned their mind to redeployment often cannot answer it later. Employees who applied for an internal vacancy during the process, or who identified one, are in a materially stronger position.

Redundancy pay under the National Employment Standards

The NES sets a minimum redundancy pay scale based on continuous service with the employer: four weeks at one year but less than two; six weeks at two but less than three; seven weeks at three but less than four; eight weeks at four but less than five; ten weeks at five but less than six; eleven weeks at six but less than seven; thirteen weeks at seven but less than eight; fourteen weeks at eight but less than nine; sixteen weeks at nine but less than ten; and twelve weeks at ten years and over. The reduction at ten years is not an error in the legislation - it reflects the long service leave entitlement that arises around that point. Employees with less than twelve months of continuous service have no NES redundancy pay entitlement. An award, enterprise agreement or contract can provide more than the NES, and many do, so the applicable instrument should be read rather than the minimum assumed.

Small business employers and other exceptions

Small business employers - fewer than fifteen employees, counted across associated entities and including regular and systematic casuals - are generally not required to pay redundancy pay under the NES, although an award, agreement or contract may still require it. The Fair Work Commission can also reduce the amount payable where the employer obtains other acceptable employment for the employee, or cannot pay the amount. Separately, some industries operate redundancy schemes through their awards or agreements that displace the NES scale entirely. None of these should be assumed either way without reading what applies to the role.

Notice, leave and final pay

Redundancy pay sits on top of, not instead of, other entitlements. Notice of termination under the NES is based on continuous service, with an additional week for employees over 45 with at least two years of service, and can be paid out in lieu. Accrued annual leave must be paid out, and long service leave in Western Australia is governed by state legislation with its own qualifying periods. Final pay disputes after a redundancy are common and usually come down to which instrument applies rather than to any disagreement about the facts.

Voluntary redundancy

A voluntary redundancy is an agreement, and the terms are negotiable in a way that a compulsory redundancy is not. What is offered is often the NES minimum plus a discretionary amount, conditioned on signing a deed of release. Before accepting, it is worth knowing what the award or agreement would require in any event, what accrued entitlements are payable regardless, how the payment will be characterised, and precisely what the deed extinguishes. Accepting voluntary redundancy generally forecloses an unfair dismissal claim, which is usually appropriate but should be a decision rather than an accident.

Tax is a separate question

A payment that is a genuine redundancy for employment law purposes is not automatically a genuine redundancy payment for tax purposes - the two tests are set by different legislation and can diverge, particularly around age and the reason for the termination. Concessional treatment applies up to a limit that is indexed annually. We do not give tax advice; we identify where the question arises so it can be put to your accountant before the payment is made rather than after.

For employers restructuring

The redundancies that hold up are the ones where the sequence was right: the operational reason was documented before the selection, the consultation term in the applicable award or agreement was located and followed, redeployment across the group was genuinely considered and recorded, selection criteria were applied consistently, and the payments were calculated from the correct instrument. Doing that adds days to a restructure. Not doing it adds a claim, and the twenty-one day window means you learn about it quickly.

Redundancy advice in Vietnamese

Redundancy arrives with a package of documents and a short deadline to accept, which is a difficult combination in a second language. Vinh Nguyen speaks fluent Vietnamese and can explain what is genuinely owed, what is discretionary and what the deed of release gives away, in Vietnamese, before anything is signed.

• Vietnamese-speaking legal help →

Process

1. 1

   We confirm the date the redundancy took effect and how much of the 21-day period remains.

2. 2

   We identify the award or enterprise agreement that applies to the role.

3. 3

   We test the three limbs - the job, consultation, and redeployment - against what actually happened.

4. 4

   We check the payments against the NES and the applicable instrument, not against what was offered.

5. 5

   We review any deed of release before it is signed.

6. 6

   We advise on whether to negotiate, accept, or lodge, and are direct where there is no claim.

What to prepare

• Your contract of employment and position description.
• The redundancy letter and anything issued about the restructure.
• The award or enterprise agreement that applies, if you know it.
• Payslips and a record of your start date.
• Any calculation of the payment the employer has provided.
• The deed of release, if one has been offered.
• Details of any internal vacancies you knew of or applied for.

Risks, deadlines and common mistakes

• Treating a redundancy as final without testing whether the job actually disappeared.
• Missing the 21-day window because negotiation over the package was still running.
• Accepting a calculation based on the NES minimum when the award provides more.
• Signing a deed of release before the entitlements have been checked.
• Assuming small business status removes every redundancy entitlement, without reading the award.
• Deciding a voluntary redundancy on the headline figure without the tax question being asked.