What is redundancy?

The law is in place to ensure that employee redundancy is about the job and not the person. If a redundancy is imminent, or you’ve been made redundant from your role, it’s important to understand your rights. Losing your job can be a confusing and emotional time, so having the correct information can help you to navigate the situation.

When can someone be made redundant?

Redundancy may be necessary when a position is no longer required to be performed by anyone. This can happen for a number of reasons, which may include:

• the company going into insolvency or ceasing to trade
• a significant alteration to business circumstances
• advances in technology, meaning that a machine or piece of technology can replace a person who used to do something manually
• a decrease in business, meaning that less work needs to be done
• tasks needing to be done by someone at a higher or lower level than the person who is currently doing them or able to do them
• a change of business location
• a merger or takeover situation
• a function being outsourced
• a general restructure, where, for example, reporting lines might change.

The most important thing to know is that a genuine redundancy is about the job, not about the person: it is defined by a position or duties no longer being required. A redundancy is not a solution to a performance issue or about a desire to terminate a particular person’s employment.

Your rights to redundancy pay, entitlements and notice periods

If you are a permanent employee and you are being made redundant, you will be entitled to notice. This is either in accordance with:

1. the Fair Work Act (which stands at between one and four weeks of pay, plus an additional week if you are aged over 45 and have been employed for more than two years, and which is the minimum you would be entitled to), or
2. an additional and different provision within your employment contract, award or enterprise agreement. Your individual contract or workplace agreement cannot provide an entitlement that is less than the national employment standards in the Fair Work Act.

You may also be entitled to a severance payment under the Fair Work Act, sometimes referred to as redundancy pay. For this, you must meet particular criteria, such as being with your employer for more than 12 months, the employer having more than 15 employees, and other criteria, in order to qualify for this entitlement of up to 16 weeks’ pay. Again, there may be higher provisions within an award, enterprise agreement, employment contract or employer’s policy that you are covered under.

If you are a contractor, your rights are governed by the contractual agreements you have made with an organisation. In this case, you are not an employee and so there is no redundancy — instead, it is the end of a contract and the use of your services. There may be a contractual payment at the end of a contract.

If you an employee on a fixed-term contract, your right to redundancy pay and notice is more complex. If your contract is for a maximum term with a clause allowing the parties to terminate earlier, your contract can only be terminated early in accordance with that clause. In effect, this means that you will only be entitled to notice and/or redundancy pay if the clause provides for it. However, if your employment is terminated early and it is not done in accordance with that clause, then you may be entitled to relief for breach of contract.

Alternatively, if your contract is for a fixed term or until the completion of a specified task without a clause allowing for early termination and it is terminated early, then you may be entitled to redundancy pay or notice and/or relief for unfair dismissal depending on the circumstances.

If you are a casual employee, you are not entitled to a redundancy payment. Any notice is subject to the industrial agreement or contract that your employment is covered by.

What can you expect during a redundancy?

A redundancy can be a major life event and can have a significant impact on you, your family and your career. The best-case scenario is that your employer will be mindful of the effect that a redundancy will have on their employees, and consider it a last resort. In many cases, an employer will undertake the following measures to help employees whose roles are being made redundant:

• Involve you in a discussion about what is about to happen. This means you will be consulted and fully informed that your job is under threat, giving you the chance to mitigate those circumstances (for example, this may include, agreeing to work part-time instead of full-time in order to stay employed, or taking on another role within the organisation). This consultation will also allow you the time to prepare for the redundancy, both mentally and financially.
  
  
• Provide you with outplacement services. This is not mandatory, but is often done by larger organisations. This option can help you access further training or skills, as well as assistance in finding another job.
  
  
• Allow you to have some time off work during a redundancy notice period — some industrial awards and employment agreements even require this. This gives you the time to look for your next role, and prevents you reaching the end of your redundancy notice period without having had the opportunity to line up another job.
  
  

Reasons for disagreements during the redundancy notice period

Of course, not every redundancy situation meets these ideals. There are often disagreements, which could include:

• Situations where people don’t think they are genuinely being made redundant, but rather being ‘managed out’, with their job or part of their job being shifted to another employee.
• When the termination of a person’s employment is a genuine redundancy, but the employer avoids describing it as such to avoid paying the required severance payment. In this instance, the employer may attempt to terminate the employment on different grounds, such as performance.
• A lack of consultation between the employer and the employee who is being made redundant. This can cause issues such as the employee not being able to nominate themselves for another role within the organisation.
• The employer not meeting the required rights of notice periods and severance pay, in accordance with the act, award, contract or enterprise agreement that applies to the employee.
  
  

Your rights to redundancy pay entitlements 

If you suspect that your redundancy is not genuine or that you are not being paid what you are entitled to, you should first speak with your employer or human resources representative. At a minimum, this may help you to understand the industrial processes that apply to your situation, and to check your redundancy rights.

If you still feel you are not being given the right answers, it’s time to contact the Fair Work Ombudsman or seek legal advice. It is best to take these steps while you are still employed, as this often helps to resolve an issue without resorting to litigation. Be aware that time limits may apply to claims, so consider your options as soon as possible.

Being made redundant can be distressing, but understanding your rights and the responsibilities of your employer can help ease the situation.