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Redundancy Script

Version 1.0 Updated 22 Dec 2017
Correspondence Separation

Who can use this script?

This script can be used by all employers in respect of employees whose position has been selected for redundancy.


Commentary

This script is designed to be used as guide for employers who are having a discussion to notify an employee that their position has been selected for redundancy.

Before using this script, employers should ensure that it is in accordance with the circumstances of that particular redundancy. For instance, this script may be of limited utility where the organisation has not yet selected the particular employee/s whose employment may end due to a reduction in the number of positions required.

In such a circumstance, the employer would need to first choose between employees using objective selection criteria.

What is a redundancy?

Termination of employment due to redundancy is a form of dismissal by the employer. It carries with it the concept of involuntary termination of the employee’s employment. However, rather than being a fault based dismissal, redundancy is usually caused by factors such as economic conditions, business efficiency, or technological development.
Generally speaking, termination of employment due to redundancy occurs where:

  • an employer has made a definite decision that the employer no longer wishes the job the employee has been doing to be done by anyone; and
  • that decision leads to the termination of the employee’s employment.

 

Under the Fair Work Act 2009 (Cth) (the 'Act') a dismissal will not be unfair where the person’s dismissal was a case of a genuine redundancy. Under the Act a redundancy will be genuine if:

  • the job will no longer be required to be performed by anyone because of the changes in the operational requirements of the employer’s enterprise; and
  • the employer has complied with any obligation to consult contained in an applicable modern award or enterprise agreement.


Consultation

Consultation is an important step in any redundancy process.

Employers may have a legal obligation to consult arising from a term of an enterprise agreement or a modern award (“instrument”). Further, an obligation to consult may be implied into the employment contract in particular where there is an express term in the contract regarding consultation or redeployment in the event of a redundancy. Regard should also be had to any applicable redundancy policy.

The script is designed to assist employers in consulting with employees about:

  • the introduction of a change that will impact an employee’s position with the organisation;
  • the reasons for the change; and
  • the measures that the organisation has considered in an effort to mitigate against the adverse effects of the change, for instance redeployment.

 

Employees should have the opportunity to bring a support person/representative to a meeting regarding a prospective redundancy. Importantly, during the abovementioned consultation, it is advisable that employees have a chance to raise matters they consider relevant regarding the prospective redundancy, including actions that could lessen the negative effects of introducing the organisational change. The employer should then give prompt consideration to matters raised by an employee and/or their support person/representative.

To assist with these discussions, it may be necessary to set out all relevant information concerning the organisation change/s in writing, including: the nature of the changes proposed, the expected effects of the changes on employees and any other matters likely to affect employees. An employer is not required to disclose confidential information the disclosure of which would be contrary to the employer’s interests.

Possible redeployment
Ensuring that any redundancy is a genuine redundancy and exploring redeployment opportunities will assist employers in defending an unfair dismissal claim brought by an employee on the basis that the redundancy was harsh, unjust or unreasonable.
Accordingly, employers should consider, prior to terminating an employee due to redundancy, whether it would reasonable in all the circumstances for the person to be redeployed within:

  • the employer’s enterprise; or
  • the enterprise of an associated entity of the employer.

 

Record keeping
Employers should keep records of attempts made to re-deploy employees. 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.

Additional notifications
When a redundancy occurs, employers should be aware that they may have additional obligations under the Instruments which require notification and consultation with employees and the unions to which they belong. For example, where 15 or more employees will be terminated due to redundancy, employers must notify Centrelink of the redundancies prior to any termination in accordance with the applicable Instrument.

Similarly, if any employee is a member of a union, employers must also notify the unions prior to the termination of the employees in accordance with the applicable Instrument. A form of that notification is available on Workplace.

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 severance pay) under the Act will only start to accrue from 1 January 2010, where an employee previously had no entitlement to severance pay as at 31 December 2009. Advice should be sought in relation to redundancy payments if you are unsure of your obligations under the Act.

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

Legal advice
If employers are unsure when terminating the employment of an employee whether the circumstances constitute a redundancy, they 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 is 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. Regard should also be had to any applicable redundancy policy.

Caution

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

An employer may wish to use a deed of release to protect itself against any claim from an employee where the employer provides severance pay over and above the amount required by the relevant Instrument(s).

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