Redundancy

In this guide, we explain the meaning of genuine redundancy, redundancy pay and what action you can take if you believe that your redundancy wasn't correctly handled by the business.

If you've recently been made redundant or you think it might happen, you've come to the right place. MKI Legal has expertise in advising on redundancy rights. We work in this area constantly so we tend to see the same issues over and again. We can therefore provide you with accurate advice in an efficient manner. Redundancy occurs when a job is terminated because the business no longer requires that specific job to be done by anyone.

Remember, it's the position that's been made redundant, not the employee. Redundancy should not be a personal matter. That is, it's not about the employee's performance, attitude or behaviour. Redundancy generally occurs because the business has experienced a down-turn, new technology has been introduced or there has been change in the way the business does things (e.g a restructure). As a result, the business does not need that job to be done anymore.

Redundancy & Unfair Dismissal – How Does It Work?

If a redundancy has not been done properly, then the employee may have the right to lodge an unfair dismissal claim.

So how does this work?

Deadlines Apply

An employee has 21 days from their last day to lodge an unfair dismissal claim. If an unfair dismissal claim is not filed within time, then there's a good chance the case will be thrown out.

Employee Must Be Eligible

Remember, not all employees can lodge an unfair dismissal claim. Here is a short summary of those who are eligible:

You must work for a minimum period. This is either a minimum of 6 months or 12 months.

Except as mentioned below, you can't earn more than $167,500 (excluding superannuation) per year (from July 2023). This threshold changes every July.

If you earn more than $167,500, you can lodge only if you are covered by a modern award or an enterprise bargaining agreement.

You need to be terminated by the employer. Basically this means you can't resign (unless you can argue you had no choice but to resign – e.g constructive dismissal).

How Is a Redundancy Unfair?

Job No Longer Needed

An employee will be successful in an unfair dismissal claim if they can establish that their job is still needed. Sometimes a business is simply trying to create the appearance of redundancy as an excuse to dismiss that employee for another reason. This happens more frequently than it should, and we have a lot of experience in dealing with sham redundancies.

How is this decided?

The business has to convince the Fair Work Commission that it genuinely does not need that position. This can be done in a number of ways. If the business is advertising the same job – that clearly shows they still need the job and it's not a genuine redundancy.

Another Job For The Employee To Do

If there is another job within the organisation that the employee is capable of doing, and employee was not offered this job, then the employee may be successful in their unfair dismissal claim.

Consultation

Many businesses are required to give employees notice before any redundancy occurs.

This is known as consultation and it is an opportunity for employees to have their say before the business makes a final decision. Consultation is generally required if the employee is covered by a modern award or enterprise bargaining agreement. If this obligation is not carried out correctly, employees may have the right to lodge a claim.

A Different Type of Claim

Unfair Dismissal is only one type of claim an employee can make. There are others. If you've been made redundant, and you're not eligible to lodge an unfair dismissal claim, you may have other rights.

For example, you might be able to lodge another type of claim if you were made redundant because:

You exercised your employment rights (e.g took annual leave, asked for flexible work arrangements, took sick leave);

Made a complaint (whether verbally or in writing);

You had a medical condition;

You had obligations to care for children;

You were pregnant;

Due to another discriminatory reason (eg race, gender, skin colour, sexual orientation, political opinion, religion, nationality etc); or

You were off work for a short while due to illness or injury.

If any of these apply to you, it doesn't matter how much you earned or how long you were employed for – you can still lodge another claim. But you still only have 21 days from your last day.

Correct redundancy pay

The employee must be paid the correct redundancy pay. Usually this will be the payment specified under the contract, provided it is no less than the minimum entitlements under law, which in most cases is the minimum set out under the Fair Work Act. If the contract does not specify the amount of pay required, then the law sets out the minimum, which we explain further below.

Minimum entitlements (Federal System)

The Federal legislation known as the Fair Work Act applies to most businesses and employees in Australia. Businesses who run their enterprise through a company structure are covered by this Act, and so are their employees.

The Fair Work Act sets out the minimum amount of redundancy pay employees are entitled to, which depends on the length of service. These minimums are currently determined as follows:

Minimum entitlements (Federal System)

Period of service	Payout
1 year to 2 years:	4 weeks
2 years to 3 years:	6 weeks
3 years to 4 years:	7 weeks
4 years to 5 years:	8 weeks
5 years to 6 years:	10 weeks
6 years to 7 years:	11 weeks
7 years to 8 years:	13 weeks
8 years to 9 years:	14 weeks
9 years to 10 years:	16 weeks
10 years plus:	12 weeks

However, remember, if the contract specifies a more generous amount of redundancy pay – then the contract applies.

Western Australian State Government employees have their own redundancy provisions (which are more generous than the Fair Work Act).

Excluded from redundancy pay

The following employees are not entitled to redundancy pay under the Fair Work Act:

Employees hired for a specified period of time, season or for a specified task;

Those terminated because of serious misconduct;

Casual employees;

Apprentices;

Trainees employed only for the length of the training agreement;

Employees of small businesses (less than 15 employees);

Employees who have been employed for less than 12 months.

Free Discussion

If you have been made redundant, contact us for a free discussion about your rights. We can generally tell you over the phone if you may have a claim.