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.
What is a Genuine Redundancy?
Fair Work Australia defines redundancy as:
- When an employer does not need an employee’s job to be done by anyone; or
- 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.
A genuine redundancy as per the Fair Work Act 2009 (Cth) occurs when:
- The employer no longer requires the person’s job because of changes in operational requirements; or
- The employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.
However, a dismissal is not a genuine redundancy if:
- Someone else is hired to do the employee’s job;
- The employer has not complied with the relevant requirements to consult with employees about the award; or
- Could have reasonably given the employee another job in the business.
Even 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.
Giving Notice of Termination of Employment
Thus, 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. Furthermore, 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. Moreover, this notice must be provided in line with the Fair Work Act 2009 (Cth):
|Employee’s Period of Service with Employer||Minimum Period of Time for Notice|
|Less than 1 year||1 week|
|More than 1 year but less than 3 years||2 weeks|
|More than 3 years but less than 5 years||3 weeks|
|More than 5 years||4 weeks|
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.
So, if you would like to know more about your company’s obligations to your employees or would like an existing employment agreement reviewed, you should get in touch with an employment lawyer.
Still unsure? Contact a LawPath consultant on 1800 529 728 to learn more about customising legal documents and obtaining a fixed-fee quote from Australia’s largest legal marketplace.