As a small business owner, you will have to make incredibly tough decisions regarding the employment of your employees – any one decision could change your employee’s life. Here we’ll look at genuine redundancy, a situation where an employment contract with an employee can be terminated, if there is a valid reason.

If you require advice on how to manage employment matters in your business, LawPath recommends getting in touch with an employment lawyer. Alternatively, you can look at the broad range of employment documents through our legal documents creator.

What is a Genuine Redundancy?

Fair Work Australia defines redundancy as:

  1. When an employer does not need an employee’s job to be done by anyone; or
  2. The employer becomes insolvent or bankrupt.

This can happen due to many factors, including the introduction of new technology, physical relocation of the employer, or even when the employer just can’t run the business anymore.

From this definition, a genuine redundancy is defined by the Fair Work Act 2009 (Cth) to have happened if:

  1. The employer no longer required the person’s job to be performed by anyone because of changes in operational requirements; or
  2. The employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.

A dismissal is not a genuine redundancy if:

  1. Someone else is hired to do the employee’s job;
  2. The employer has not complied with the relevant requirements to consult with employees about the award; or
  3. Could have reasonably given the employee another job in the business.

If there is no genuine redundancy, there may be scope for an employee to claim damages for unfair dismissal, general protections dismissal, or unlawful termination.

Employer Requirements

Giving Notice of Termination of Employment

If you or your company is in a situation where it is likely that an employee will be made redundant, you need to let them know of the changes that can impact them. You are obliged under all awards and registered agreements to consult with the employee where it affects them.

Additionally, if termination of the employment contract is certain, you must provide written notice of the employee’s end of employment. This notice must be provided in accordance to the following graph, providing by the Fair Work Act 2009 (Cth):

Employee’s Period of Service with EmployerMinimum Period of Time for Notice
Less than 1 year1 week
More than 1 year but less than 3 years2 weeks
More than 3 years but less than 5 years3 weeks
More than 5 years4 weeks

Final Pay

If an employee has been made redundant through a genuine redundancy, the employer is still required to pay the employee the following:

  • Outstanding wages for hours they have worked;
  • Accumulated annual leave;
  • Redundancy pay; and
  • Annual leave loading or accrued leave, if applicable.

The Fair Work Ombudsman have a Notice and Redundancy Calculator on their website which allows you to easily calculate the amount of redundancy pay you are required to pay out in a situation where a genuine redundancy has happened.

If you would like to know more about your company’s obligations to your employees or would like an existing employment agreement reviewed, LawPath recommends getting in touch with an employment lawyer.

Unsure where to start? Contact a LawPath consultant on 1800LAWPATH to learn more about customising legal documents, obtaining a fixed-fee quote from our network of 600+ expert lawyers or to get answers to your legal questions.

Richard Yuen

Richard Yuen

Richard is a Paralegal working in our content team which aims to provide free legal guides to facilitate public access to legal resources. With an interest in information law, his primary focus is in how the law adapts to govern the use and development of new technology in a modern environment.