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Redundancy Letter to Union

Version 1.1 Updated 6 Dec 2017
Correspondence Separation

Who can use this correspondence?

This correspondence can be used by all employers.

Commentary

The Fair Work Act 2009 (Cth) (the ‘Act’) requires employers to notify and consult with relevant unions if they have decided to terminate the employment of 15 or more employees for reasons of redundancy.

Employers should also ensure they comply with notification and consultation obligations outlined in an award, agreement or contract of employment (regardless of the number of employees being made redundant).

This letter will assist you to comply with the obligations under the Act. Prior to finalising the letter you should check it complies with the relevant obligations in an award, agreement or contract of employment.

The letter to the relevant union(s) should be given as soon as practicable after the employer has made the decision to terminate and, before the corresponding dismissal of an employee takes place.
The employer will need to give the union an opportunity to consult with the employer on:

  • measures to avert or minimise the proposed terminations; and
  • measures (such as finding alternative employment) to mitigate the adverse effects of the proposed terminations.

 

The employer should not terminate an employee’s employment until this notification and opportunity to consult is provided. Failure to notify the relevant union could lead to the Fair Work Commission issuing an order, including:

  • reinstatement of an employee;
  • withdrawal of notice of termination if the notice period has not expired;
  • monetary payment in lieu of reinstatement; and
  • payment of redundancy pay.

 

Record keeping

Employers should keep records of attempts made to re-deploy employee(s). Records of employer attempts to search for alternate jobs and the reasons why redundancy was necessary should also be retained (in the event a claim is made). Additionally records should be kept of the discussions with employees in connection with these matters. Employers should update the personnel file to note termination was for redundancy.

Legal advice

Before carrying out a redundancy, employers should consult their agreements and awards to ensure they comply with any relevant requirements relating to redundancy.

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.

Mandatory redundancy pay

National system employers should be aware that the Act introduces mandatory redundancy pay for employees made redundant in workplaces that are not a 'small business employer' as defined by the Act.
An obligation to provide redundancy pay under the Act applies from 1 January 2010. Importantly, continuous service (relevant to the calculation of redundancy pay) under the Act will only start to accrue from 1 January 2010, where an employee previously had no entitlement to redundancy pay as at 31 December 2009. For employees who had an entitlement to redundancy pay prior to 31 December 2009 (e.g. under a collective agreement, award or other industrial instrument) their period of continuous service (relevant to the calculation of redundancy pay) will usually be from the commencement of their employment with the employer. Advice should be sought in relation to redundancy payments if you are unsure of your obligations under the Act.

Additional redundancy pay obligations may be contained in the applicable modern award or enterprise agreement.

Advice should be sought in relation to redundancy payments if you are unsure of your obligations.

Further considerations

Where 15 or more employees will be terminated due to redundancy employers will also need to notify Centrelink. A letter to Centrelink is available on this website.

Appropriate care also should be taken in selecting employees for redundancy in order to avoid discrimination claims.

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