Redundancy

When an employer wishes to re-organise its business or in times of economic stress, attention turns to how best deploy its workforce.

If an employer has genuinely decided that it does not need the job the employee has been doing to be done by anyone else, it may decide to terminate the employment of the employee ‘for reasons of redundancy’.

If that decision is made, the employer:

  • should consult with the employee and consider redeployment options, and
  • must give appropriate notice of the termination.

If an employee has been terminated for reasons of redundancy, then the employee must also be paid redundancy pay (set out in the Fair Work Act, or in an applicable award or enterprise agreement).

There are some exceptions to this requirement, including:

  • where the termination is due to the ordinary and customary turnover of employment,
  • because the employer is insolvent or bankrupt,
  • where the employer obtains a reduction of the amount to be paid because it cannot pay the full amount,
  • where the employee has been employed for less than 12 months,
  • where the employer is a ‘small business employer’ (employs 15 employees or less), and
  • in some circumstances, where there is a transfer of business or employment.

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