A genuine redundancy is when the employer no longer requires
the role to be performed by the employee or by anyone else, due to
operational requirements of an organisation as a National System
Employer (which are most employers excluding the public
The National Employment Standards (NES) under the Fair Work
Act 2009 (Cth) set out minimum redundancy entitlements and the
processes for National System Employees.
Employers must meet any obligations regarding consultation and
decision making and job search entitlements in an Award, Enterprise
Agreement and/or Contracts of Employment.
If a redundancy is not a genuine redundancy, the employer risks
a claim for:
breach of contract;
breach of industrial instrument (Award or Enterprise
or other claims under the Act.
Redundancy attracts redundancy pay which is also known as
severance pay. Severance pay to be paid in addition to any payment
made in lieu of notice.
Careful consideration must be given to selection of the
position(s) and consequentially the employee(s) to be made
redundant especially in circumstances where more than one position
is redundant. Employers should be mindful of using a fair and
definitive process to minimise the risk of an adverse action
There are some exemptions to payment of redundancy or severance
employees whose period of service is less than 12 months;
casual employees and employees employed for a specific period,
task or season;
apprentices and employees employed for a specific duration
under a trainee agreement;
employees covered by a specific industrial scheme, enterprise
agreement or modern award;
small business employers;
where the employee rejects an offer of employment made by
another employer which is substantially on the same terms and
conditions as the previous employment where the employer finds the
employee alternative suitable employment;
where the employer cannot pay the amount of severance pay.
Where a position is redundant and an employer fails to make
payment of minimum severance payment as set out in the NES, Award
or Enterprise Agreement, the employer risks being ordered to pay a
civil penalty for the breach of that instrument.
If redundancy entitlements in an employment contract exceed the
minimum statutory entitlement, the entitlements in the contract
must be paid by Employers. Employers risk claims for breach of
contract if they fail to comply the contractual terms.
In answer to the question posed; No, redundancy should not be
used as a means to avoid claims. If a redundancy is not genuine it
gives rise to potential claims and civil penalties.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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