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What Is A Genuine Redundancy, And Why Is It So Important To Get It Right?

Published June 12, 2020 (last updated July 22, 2020) Author: Employsure
Employer figuring out what genuine redundacy is

Due to the unfortunate economic conditions generated by the COVID-19 pandemic, many businesses around Australia may be considering reducing staffing costs and this may result in some roles being made redundant.

If you are an employer and are considering redundancies, an important aspect you must consider is if the redundancy is genuine. When an employee’s dismissal is a genuine redundancy the employee isn’t able to succeed in the event that they pursue an unfair dismissal claim.

This blog will explain what a genuine redundancy is, give some initial tips on redundancy, and answer some extra questions about redundancy.

What is a Genuine Redundancy?

A genuine redundancy means the employee is being dismissed as you don’t require their role to be filled anymore. A genuine redundancy arises where the employer no longer requires the person’s job to be performed by anyone due to changes in the operational requirements of the enterprise.

A redundancy is not genuine if the employer:

  • still needs the employee’s job to be done by someone
  • could have reasonably, in the circumstances, given the employee another job within the employer’s business (or associated entity)
  • has not followed consultation requirements as provided by the relevant Modern Award or enterprise bargaining agreement (if applicable)

Below are common scenarios in which a redundancy may occur:

  • The business is restructuring
  • New technology fulfils the job obligations
  • The business is relocating or closing down
  • There is a prolonged and significant downturn in business

Why is it so Important that the Redundancy is “Genuine”?

If a redundancy is genuine, an employee cannot succeed in the event that they pursue an unfair dismissal claim. When undertaking a redundancy, an employer should ensure that it is genuine.

If you’d like to know more about what to expect if you receive an unfair dismissal claims, why not download our guide on What To Expect When Facing An Unfair Dismissal Claim.

How Do I Avoid Making a Redundancy that is Not Genuine?

As above, you should understand what a genuine redundancy is, and ensure you are carrying out a genuine redundancy and complying with any extra provisions in the applicable Modern Award or enterprise bargaining agreement.

Note: A redundancy is not genuine if the employer:

  • still needs the employee’s job to be done by someone
  • could have reasonably, in the circumstances, given the employee another job within the employer’s business (or associated entity)
  • has not followed consultation requirements as provided by the relevant Modern Award or enterprise bargaining agreement (if applicable)

Is There Anything Else I Need to Know About Redundancies?

There are several things that need to be considered when embarking on a redundancy:

  • All awards and registered agreements have a consultation process for when there are major changes to the workplace, which may include situations such as redundancies.
  • Employers are obliged to consider suitable alternative employment before making the role redundant (if applicable).

Minimum Notice Periods

When ending an employment because of redundancy, if the employee is engaged on a permanent basis you need to provide adequate notice or make payment in lieu.

The minimum notice period in the National Employment Standards (NES) is based on how many years your employee has worked for you (continuous service).

Minimum notice periods for redundancy according to the NES:

The applicable Modern Award or enterprise bargaining agreement may stipulate a longer notice period than the below. If so, then that notice period which needs to be applied.

Period of employment. Minimum notice period.
Less than one year One week
One – three years Two weeks
Three – five years Three weeks
Over five years Four weeks

An employee will be entitled to an additional week of notice if they are over the age of 45 and have been engaged for at least 2 years.

Minimum Redundancy Payments

The NES also provides for a minimum payment to an employee made redundant.

Minimum payment for redundancy according to the NES

The applicable Modern Award or enterprise bargaining agreement may stipulate longer periods of continuous service and/or more weeks of pay than the below. If so, then that notice period which needs to be applied.

Period of continuous service.
Weeks of pay.
At least one year but under two years
4
At least two years but under three years
6
At least three years but under four years
7
At least four years but under five years
8
At least five years but under six years
10
At least six years but under seven years
11
At least seven years but under eight years
13
At least eight years but under nine years
14
At least nine years but under 10 years
16
At least 10 years
12

Just remember, not all employees are entitled to redundancy pay. The following employees don’t get redundancy pay:

  • employees whose period of continuous service with the employer is less than 12 months
  • employees employed for:
    • a stated period of time
    • an identified task or project
    • a particular season
  • employees fired because of serious misconduct
  • casual employees
  • trainees engaged only for the length of the training arrangement
  • apprentices
  • employees of a small business

Are There Are Any Alternatives To Redundancy?

There are a few alternatives available to employers. We have put together a FREE guide explaining some of these alternatives, which you can download here.

If you’d like to more about redundancy, you can download the guide above or read this general article that can be found here. We also have some FAQs below.

Frequently Asked Questions

  • Do Casuals Get Paid Redundancy?

    In general, casuals do not have access to redundancy payment. However, regular and systematic casuals may have access to paid redundancy. You should seek advice on whether or not redundancy pay is applicable. Modern Awards and enterprise bargaining agreements may have different provisions for redundancy, so make sure you consult the applicable modern award / EBA.

  • What Is Suitable Alternative Employment In Redundancy?

    Suitable alternative employment in redundancy can include job sharing or moving the employee to a role that shares similar skills to theirs. For example, a recruitment agent may be able to fill a role in telesales.  It is important to note that the alternative position must be of similar pay and status, employers should not assume that an available role of lesser pay or seniority would be undesirable to the employee facing redundancy.

    Note: A redundancy will not be ‘genuine’ if it would have been ‘reasonable in all the circumstances’ to redeploy the employee to another role within the organisation (including to any associated entities).

  • How Long After Redundancy Can I Employ Again?

    The premise of redundancy is that the role performed is no longer required. Accordingly, an employer should not rehire in that position.

  • What Is Voluntary Redundancy?

    Voluntary redundancy occurs when an employee volunteers or agrees to be made redundant.

    In most cases of voluntary redundancy, the employer offers a financial incentive to an employee to voluntarily resign subject to a formal Deed of Release (which prevents the employee from bringing a successful claim).

  • How Do You Work Out Voluntary Redundancy Pay?

    Voluntary redundancy pay is agreed between the parties. However, it should not fall beneath the entitlements to which the employee would otherwise be entitled.

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