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Pulse Check: redundancy – your questions answered

By CCIWA Editor 

As a CCIWA Member, you get unlimited access to our Employee Relations Advice Centre (ERAC). We are here to help you manage your employee relations needs. This includes prompt advice on your circumstances, consulting, documents such as kits and guides and up-to-date industrial relations information.

Here are some of this month’s frequently asked questions that have come through our advice centre.

Q: What are our obligations regarding redundancies?

A: In brief, a ‘genuine redundancy' is defined in the Fair Work Act 2009 (Cth) as:

  • The employer no longer requires the person’s job to be performed by anyone due to changes in the operational requirements of the employer’s enterprise, and;
  • The employer has complied with any enforceable obligation under a relevant industrial instrument with respect to consultation about the redundancy.

Redundancies usually occur because of events such as restructures, acquisitions, mergers, changes in technology and closing a business.

Employers are required to consult with their employees regarding redundancy. Employers should check their applicable industrial instrument(s) to ensure they’re meeting the specific requirements under the relevant modern award or enterprise agreement.

Q: Do we need to consider redeployment opportunities?

A: A critical part of the consultation process requires the employer to consider other options as a means of mitigating termination. Redeployment is one of the options that should be considered.
Additional options that may be presented include but are not limited to:

Change of duties from the employee's current role

  • Alteration of days/hours of work
  • Redeployment
  • Transfer of job location
  • Job sharing

Q: If we take steps to mitigate termination, do we still have to pay redundancy?

A: If an employee agrees to a change in employment conditions to mitigate termination, this can only be done via mutual agreement as it is a change to the employee’s employment conditions. However, as their initial role is still no longer required, the situation still triggers redundancy provisions. Federal system employers are required to pay redundancy as per the below table:

Employee’s period of continuous service on termination Redundancy Pay Period (weeks)
Less than 1 year Nil
1 years and less than 2 years 4
2 years and less than 3 years 6
3 years and less than 4 years 7
4 years and less than 5 years 8
5 years and less than 6 years 10
6 years and less than 7 years 11
7 years and less than 8 years 13
8 years and less than 9 years 14
9 years and less than 10 years 16
10 years and over 12

If an employer has successfully taken steps to mitigate termination as part of the redundancy process, they can apply to the Fair Work Commission (FWC) to vary the amount of redundancy payable to the employee. This can be done by the employer.

We recommend seeking advice on how to do this before applying to the FWC because of the steps involved.

Q: Are there any exemptions to paying redundancy?

A: The National Employment Standards allow for exemptions in paying redundancy in some circumstances, such as:

  • Small business redundancy exemption: This is for businesses that have a headcount of less than or equal to 14 employees, including regular and systematic casual employees.

Businesses that become a small business as a result of downsizing leading up to liquidation may still be required to pay their employees redundancy.

  • Employees who have less than 12 months of continuous service.
  • Employees on a fixed-term contract, or a contract that is for a set period of time or season which comes to its natural end. This includes trainees employed for the length of a training agreement.
  • Apprentices and most casual employees.

Enterprise agreements and awards may have different redundancy provisions which could apply, such as industry specific redundancy schemes. These can override the listed exceptions and provide different payment amounts than in the table above. It is important to refer to the relevant industrial instrument before starting a redundancy process to ensure the correct process is followed and that employee entitlements are accurately calculated.

 

If you have any questions about employment contracts, contact our Employee Relations Advice Centre on 9365 7660 or email [email protected], or if you would like to speak to one of our employment lawyers, email [email protected].  

What are your obligations as an employer around redundancy? Our experts answer your FAQs.

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