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Redundancy Letter to Centrelink

Version 1.0 Updated 19 Mar 2018
Correspondence Separation

Who can use this resource?

This correspondence can be used by all employers.

Commentary

Under the Fair Work Act 2009 (Cth) (the 'Act'), all employers who terminate employment due to redundancy will need to notify Centrelink in writing if:

  • at least 15 employees are to be dismissed due to redundancy, or
  • an award, agreement, contract or policy applies and requires them to make the notification, or
  • you decide to terminate the employment of 15 or more employees and it is for reasons of an economic, technological, structural or similar nature (or if the reasons include any of these things).

 

Legal advice

A redundancy occurs when an employer no longer requires an employee’s job to be done by anyone. This situation may arise due to a decline in business, new technology being introduced or the business being sold. If you are unsure when terminating the employment of an employee whether the circumstances constitute a redundancy, you should seek legal advice about this matter. If the termination of an employee's employment is incorrectly classified as a redundancy and a redundancy payment made, there may be taxation consequences for both the employer and employee. You should obtain taxation and legal advice about these issues if you are unclear as to the true nature of the termination.

Before carrying out a redundancy, employers should consult their agreements and awards to ensure they comply with any relevant requirements relating to redundancy, to minimise the risk of an unfair dismissal claim being lodged against them.

Mandatory redundancy pay

From 1 January 2010, national system employers should be aware that mandatory severance pay is payable on redundancy to eligible employees. There are however certain exemptions from that obligation.

Some of the common exemptions from the obligation to provide severance pay are detailed below:

  • the employer employs less than 15 employees
  • the employee has less than 12 months continuous service with the employer
  • the employee is a casual
  • the employee is terminated because of serious misconduct
  • the employee is employed for a specified task or a specified period of time, or for the duration of a specified season
  • a training arrangement applies to the employee (other than an apprentice) and his/her employment is for a specified period of time, or limited to the period of the training arrangement
  • the employee is an apprentice
  • an industry-specific redundancy scheme in a modern award applies to the employee or the industry specific redundancy scheme from the modern award which covered the employee is incorporated into an enterprise agreement which applies to the employee.


Modern awards may also include exemptions from the obligation to provide severance pay. A number of other potential exemptions apply from the obligation to provide severance pay. Given the complexity of this area, it is advisable for employers to seek advice to confirm that they can apply a relevant exemption from the obligation to provide severance pay.

Further considerations

Before carrying out a redundancy, employer must ensure that they comply with the consultation requirements contained in an award, agreement or policy applying to a person’s employment. The purpose of the consultation process is to:

  • provide employees with information about the proposed changes to the business and why this will likely result in redundancies;
  • give employees an opportunity to raise any suggestions about ways in which the redundancies could be avoided or the effects of the redundancies minimised;
  • allow employers an opportunity to consider any suggestions raised by employees before making a final decision about the redundancies.

 

Where 15 or more employees will be terminated due to redundancy national system employers must also consult with relevant unions and notify the unions prior to the termination of the employees if any of the employees is a union member. Additionally, any obligations contained in awards, agreements and contracts must be complied with.

Appropriate care needs to be taken in selecting employees for redundancy in order to avoid unlawful discrimination claims.

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