By

Catherine Ngo

Content writer, presenter and podcaster

Our Workplace Advice Line frequently receives redundant enquiries from employers. Among the most common queries is how to initiate the redundancy process.

Question: "We are restructuring the business and need to make some roles redundant. Where do we start to ensure compliance?"  

Answer: No matter how much experience you have managing redundancies, each is unique. In this article, we have outlined the things you need to know to get started. 

To clarify, a redundancy can occur when an employer either:

  • No longer requires an employee to perform their job duties or 
  • Becomes insolvent or bankrupt.

Other common scenarios that may lead to redundancy include:

  • Introduction of new technologies that automate or eliminate the need for people to manage
  • Slowing down of business operations due to decreased sales or production levels.
  • Closure of the business or a specific department or location.
  • Relocation of the business interstate or overseas.
  • Restructuring or reorganisation of the business due to a merger, takeover, or other significant operational changes.

 

What is considered a genuine redundancy? 

A redundancy is considered genuine when:

  • The employee's job is no longer required to be performed by anyone.
  • The employer has followed all consultation requirements outlined in the relevant award, enterprise agreement, or registered agreement.

In cases of genuine redundancy, employees are not eligible to make an unfair dismissal claim. 

However, a dismissal may not be considered a genuine redundancy if:

  • The employer continues to require the job to be performed (e.g., hires someone else to do the job).
  • The employer has not complied with the relevant consultation requirements with the employees regarding the redundancy as outlined in an award or registered agreement.
  • The employer could have reasonably provided the employee with an alternative position within the employer's business or an associated entity, given the circumstances.

 

What are the consultation requirements?

All awards and registered agreements mandate a consultation process when faced with significant workplace changes such as redundancies. This process outlines the steps employers must take when making decisions that could lead to redundancies. It should commence promptly after the decision has been made. Throughout the consultation process, thorough documentation is a must to ensure accountability and legal compliance. 

Notification of redundancies

  • Communicate the reasons behind necessary redundancies to all employees, as they affect the entire company.
  • Ensure that teams feel supported and informed about the rationale and understand plans.

Detailed timelines

  • Share a clear timeline outlining the stages and milestones of the redundancy process.
  • Provide guidelines on what to expect at each stage.

Employee feedback

  • Engage in open communication and transparency to address employee concerns.
  • Gather ideas, suggestions, and concerns from employees.
  • Make sincere efforts to incorporate feasible suggestions into decision-making.

Ongoing support

Discuss assistance in finding new employment, such as:

  • Referrals for CV support, job search advice and interview coaching
  • Training and reskilling opportunities

 

Need to make 15 or more employees redundant?

Businesses considering laying off 15 or more employees must adhere to specific rules. Employers are required to inform Centrelink in writing of the intended layoffs before the employees' redundancy.

The notification must include:

  • The reason for the layoffs
  • The estimated number and categories of employees who will be affected
  • The timing of the layoffs

Failure to comply with these notification requirements may result in penalties for the employer.

 

Are all employees entitled to redundancy pay?

Only some people are entitled to a redundancy pay. Certain employees are not eligible for redundancy pay under the NES. 

These employees include:

  • Those with less than 12 months of continuous service with the employer.
  • Employees are employed for a stated period, for an identified task or project, or for a particular season.
  • Employees terminated due to serious misconduct.
  • Casual employees.
  • Trainees engaged solely for the duration of their training agreement.
  • Apprentices.

 

Other things to consider

Redundancies can negatively affect remaining employees, including reduced motivation, increased stress, and weakened perceptions of job security. While attention is often given to supporting departing employees, keeping the existing workforce informed and supported during this challenging period is crucial.

Even employees whose jobs are not directly affected by witnessing their colleagues' experiences can be negatively impacted. This can lower morale and affect the work environment, business operations, and overall performance.

While redundancies can be disruptive, they allow organisations to learn and improve. Employers should conduct post-redundancy reviews to assess the situation, identify areas for improvement, and better prepare for future redundancies.

Feedback from affected employees during redundancy discussions can be invaluable. This input can help organisations change existing practices and policies and enhance the level of support and guidance provided. Proactive measures can help build resilience and better prepare managers for future challenges.

Employers should also evaluate their overall redundancy process, ensuring line managers can handle such situations confidently and empathetically. Research indicates a significant gap in line manager training on handling redundancies, highlighting the potential for unintended emotional damage.

Effectively managing redundancies is critical. By carefully planning, executing, and evaluating the process, employers can minimise the impact on all parties involved.

Need advice on managing redundancies? 

If you're a member of My Business Workplace, you have access to the Workplace Advice Line. Log into your My Business Workplace account, and head to the Support page to view how many calls you have access to. 

Download these redundancy templates from My Business Workplace to help you with the redundancy process. 

Catherine Ngo

Content writer, presenter and podcaster

Catherine is passionate about unravelling the latest news and insights to help HR managers, business owners, and employers.