Genuine or Sham Redundancy?

Every week we get questions from small businesses about how to make an employee redundant.  However, in the majority of these instances the small business wants to make the employee redundant because their performance or conduct is poor.  Redundancy is seen as the least confrontational and easiest way to terminate an employee’s employment.

What we like to remind these businesses is that when it comes to redundancy it is the position not the person that is made redundant.  If someone is underperforming or has poor conduct, then a process needs to be put in place to manage the employee better. In our experience these are some of the reasons small business avoid performance managing employees and use redundancy instead:

  • Don’t know how to performance manage
  • Want to avoid confronting the employee
  • It takes too long to put a performance management process in place
  • Worried the employee will say they are being bullied
  • Worried about an unfair dismissal claim

However, there are many benefits for dealing with an underperforming or misbehaving employee head on rather than using redundancy:

  • The employee actually improves
  • Other employees see that the business is serious about how they perform and behave
  • A position in the business that is needed is not removed
  • Redundancy payments for business with 15 + employees are not paid
  • An unfair dismissal claim for a sham redundancy is avoided.

Remember that there are strict processes in place for managing redundancies under the Fair Work Act and Modern Awards which must be followed which include consultation, selection and notification.

If you require assistance with performance management or managing a genuine redundancy, please contact ProcessWorx on (08) 9316 9896 or email


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