An Employer’s Guide

With the dramatic shift in the market we are seeing a lot businesses faced with having to make employees redundant. When making employees redundant you must make sure it is a genuine redundancy in order to avoid unfair dismissal claims. A genuine redundancy is when you no longer require a job to be performed and have not hired a replacement employee. You must also follow the consultation requirements described in the employee’s award or agreement, as they outline how to talk to employees about major workplace changes, including redundancy.

Redundancy pay or severance pay is usually based on an employee’s continuous service with the employer, which is the length of time they are employed, not including unpaid leave. Redundancy pay may be based on conditions set out in an award or agreement. In some instances you do not have to provide redundancy pay to an employee. Examples of this are:

  • some smalls businesses (less than 15 employees)
  • employees with continuous service of less than 12 months
  • employees only employed for a certain period of time, task, project, season, or only for the length of a training agreement
  • employees whose termination was due to serious misconduct
  • casual employees
  • apprentices

You may be able to reduce the amount of redundancy pay to an employee if you find acceptable alternative work for them, or if you cannot afford the redundancy payment. An application to the Fair Work Commission must be lodged before the employee is made redundant in order to be eligible to reduce redundancy pay.

Fair Work is strict when it comes to following the appropriate conditions set out in awards and agreements. We recommend reviewing possible alternatives to redundancy if you feel you may not be exercising genuine redundancy. It is important to follow the appropriate procedures in order to avoid unfair dismissal claims. ProcessWorx can assist businesses faced with the difficult task of reducing their headcount.

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