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Employsure’s guide to redundancy

RedundancyMay 19, 2016

Employsure’s guide to redundancy (Last Updated On: August 9, 2016)

Businesses can often face requirements to make a position or employee redundant. These scenarios are all too common in and this guide can provide assistance to any business to ensure compliance under the Fair Work Act 2009 (the Act).

What you must do

If the time arises where your business is faced with redundancy, the Fair Work Act 2009 and the National Employment Standards (NES) lay out the minimum requirements to ensure a fair process is adhered to and all parties involved arrive at the best possible resolution. Unfair dismissal claims can quickly arise when requirements and processes are not followed correctly. This in turn can become expensive and cause unwanted stress for your business.

The first step when managing a redundancy is determining whether it is reasonable and genuine, and in the best interest for the business. It is important for businesses to consider all viable alternatives when considering redundancies. The Act requires that a genuine redundancy can be established when a business no longer requires the job to be performed by anyone, due to changes in the operational requirements of the enterprise. Determining the existence of a genuine redundancy should be decided on a case by case basis and highly recommend seeking specialist advice before moving forward with any processes.

The next step is to warn all employees who may be affected. This will involve an initial meeting with the employee to explain the situation, how it arose, and alternative options that are also being considered by the organisation. This should be followed up with a consultation meeting with affected employees, providing an opportunity for them to ask any questions relating to the process and other potential positions within the business. Please note, all employee discussions should be held one on one.

Following the decision to proceed with a redundancy, the NES stipulate requirements in regards to notice of termination and redundancy pay. These figures are dependent on a number of considerations, including:

  • the number of employees in the business
  • whether the employee works on a full-time, part-time or casual basis
  • the length of time the employee/s being made redundant have worked in the business
  • the age of the employees being considered for redundancy

The notice of redundancy is directly related with the period of continuous service of involved employees. Among other things, the minimum notice period for length of service is shown below:

  • less than one year employment – one week notice
  • greater than one, but less than three years employment – two weeks’ notice
  • greater than three, but less than five years employment – three weeks’ notice
  • greater than five years employment – four weeks’ notice
  • It is important to note these figures are representative of the statutory minimum and can be different depending on the award for the industry your business operates in, or the presence of a collective agreement or contractual entitlement.

Redundancies can quickly become a complicated and difficult process for all parties involved. Following an incorrect procedure can cause unnecessary stress and possible unfair dismissal claims. For a piece of mind and stress free process, call Employsure on 1300 651 415.

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