If you're planning on making structural changes
which may result in an employee's role no longer being
required, don't forget to address your obligations around
Those obligations may be found either in the Fair Work Act, a
contract of employment, or any award or enterprise agreement
applying to your employees.
When is redundancy pay due?
Under the Act, unless you're a small business employer, an
employee with more than 1 year's continuous service is entitled
to redundancy pay if their employment is terminated because the
employer no longer requires the employee's job to be done by
anyone or the employer has become insolvent/bankrupt.
Rates of entitlement are prescribed under the Act by reference
to the employee's length of service.
You may have obligations to consult with an employee about the
redundancy. Those obligations are usually found in awards (and can
be found in enterprise agreements), and require that you do more
than just tell the employee that his or her days are numbered.
Consultation should take place after you have made the decision
to introduce the restructure but before you decide on the effects
that change may have on the employee (i.e. that their employment
will terminate on account of redundancy). You must then consider
the matters the employee raises at the consultation before making a
An employee won't be able to access the unfair dismissal
jurisdiction of the Act if their termination was on account of
'genuine redundancy' (which is defined in the Act).
Relevantly, the termination will not be a case of 'genuine
redundancy' if it would have been reasonable to redeploy the
employee in your or an associated entity's business.
So, if there's another role for which they're qualified,
you need to offer it to them, even if it involves a pay cut.
Don't assume that the employee won't be interested in
taking up the offer.
The other issues
As usual you must also ensure any termination is not for an
unlawful reason noting that the general protections and, for
employees with 6 months' service (12 for small business
employees) earning less than $133,000 a year, unfair dismissal
provisions of the Fair Work Act are always sitting in the
background for eligible employees.
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Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
Australian employees receive certain entitlements (such as annual leave and superannuation) where contractors do not.
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