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How to make an employee redundant

Choosing which employees need to be made redundant can be a difficult decision for employers, and the consequences of not following an appropriate process can be both costly and time-consuming. It's important to create a redundancy plan, let's take a look at your steps.

04 May 2022

WHAT'S A REDUNDANCY PLAN?

Redundancy in the workplace can be a big deal with repercussions for everyone. There are a number of important steps to take such as maintaining open communication and supporting employees throughout the process. Having a redundancy plan can help you better navigate the situation. Here's what you need to do.

REDUNDANCY PAYMENTS

The National Employment Standards (NES) prescribes a scale of redundancy payments based on an eligible employee's years of continuous service with the employer. Each redundancy payout is based on the following scale:

less than one year's continuous service – nil
at least one year but less than two years continuous service – four weeks' pay
at least two years but less than three years continuous service – six weeks' pay
at least three years but less than four years continuous service – seven weeks' pay
at least four years but less than five years continuous service – eight weeks' pay
at least five years but less than six years continuous service – 10 weeks' pay
at least six years but less than seven years continuous service – 11 weeks' pay
at least seven years but less than eight years continuous service – 13 weeks' pay
at least eight years but less than nine years continuous service – 14 weeks' pay
at least nine years but less than ten years continuous service – 16 weeks' pay
at least ten years continuous service – 12 weeks' pay.

EMPLOYEES EXEMPT FROM REDUNDANCY PAY

Under ss121 and 123 of the Fair Work Act, the redundancy pay scale in the NES does not apply to an employee's termination of employment if, immediately before the time of the termination due to redundancy, or at the time when the person was given notice of termination:

the employer is a small business employer (employs fewer than 15 employees)
an employee has less than 12 months' continuous service with the employer
the person is a casual employee
the employee is terminated because of serious misconduct
the employee is employed for a specified task, or a specified period of time, or a specified season and is terminated at the completion of the specified task, time or season
a training arrangement applies to the employee, and their employment is for a specified period of time, or is, for any reason, limited to the duration of the training arrangement
the employee is an apprentice
an industry-specific redundancy scheme in a modern award applies to the employee or is incorporated into an enterprise agreement which applies to the employee.

My Business Workplace has a redundancy policy ready to download and implement in your workplace today.