Redundancy
Lawyers & Barristers

Redundancy is where there is no longer a job for the employee or if the employer becomes bankrupt or insolvent.

This can happen when the business:

• Introduces new technology
• Sales or production slows down
• Moves overseas or to another state
• Restructures due to a merger or takeover

In certain situations, you may have been unfairly dismissed instead of being made redundant. If you believe you have been unfairly dismissed you should consult a lawyer as you may be able to make a claim against your formal employer.

A genuine redundancy is where a person’s job does not need to be done anymore by anyone, and the employer has followed all of the consultation requirements in your contract, award or agreement. A dismissal will not be a genuine redundancy if the employer:

• Hires someone else to do your job.
• Didn’t consult with you about the redundancy, nor considered your ideas and suggestions about change.
• Could have given you another job within the business.

If your redundancy is not considered a genuine redundancy you may be able to make an unfair dismissal claim.

If you have been made redundant you should receive severance pay and all your accrued leave. This is provided your employer employs more than 15 permanent or regular workers. If you are unsure of your employer’s business structure, consult a lawyer for advice.

How much you are entitled to depends on your contract, or any relevant industrial awards or employment agreement. Industrial awards or employment agreements sometimes allow for higher rates of severance pay.

Neither your contract, employment agreement nor industrial award can give you an amount below the minimum severance rate:

• At least 1 year but less than 2 years: 4 weeks
• At least 2 years but less than 3 years: 6 weeks
• At least 3 years but less than 4 years: 7 weeks
• At least 4 years but less than 5 years: 8 weeks
• At least 5 years but less than 6 years: 10 weeks
• At least 6 years but less than 7 years: 11 weeks
• At least 7 years but less than 8 years: 13 weeks
• At least 8 years but less than 9 years: 14 weeks
• At least 9 years but less than 10 years: 16 weeks
• At least 10 years: 12 weeks

Remember: You are entitled to negotiate a higher redundancy pay than what is first offered to you.

When an employer dismisses an employee they have to give notice. This notice is the period between when the employer tells the employee that they want to end their employment and ends on the last day of employment.

Awards or agreements may allow for different notice periods however the table below shows the minimum rates of severance notice required.

Employee’s period of continuous service entitlement:

Less than 1 year: 1 week

1-3 years: 2 weeks

3-5 years: 3 weeks

Over 5 years: 4 weeks

If your employer does not give you the proper period of notice before termination, they will be required to compensate you. This compensation must be greater than, or equal to, the amount you would have received had you worked for the period of notice. It is calculated using:

• Your ordinary hours of work.
• The amount ordinarily paid to you for those hours including allowances, penalties and loadings.
• Any other amounts payable under your employment contract.

Sometimes an employer may offer you the choice to accept redundancy voluntarily. In this situation you may be given some more financial incentives such as higher or longer severance pay. Voluntary redundancy is still legally considered a termination so you will still be entitled to other entitlements such as long service leave and annual leave loading.

Only accept voluntary redundancy if that is the best career and financial choice for you. In other words, you are not obligated to take the redundancy package. If you are forced or in any way coerced to take the redundancy package, in law, it may be the equivalent of unfair dismissal, and you should get professional advice from a lawyer on the legal options your have.