Redundancy After JobKeeper

Published April 12, 2021 (last updated January 25, 2022) -

Now the JobKeeper wage subsidy has ended, employers considering making an employee’s role redundant need to review their options and follow the correct procedures, or risk an unfair dismissal claim, according to Employsure, Australia’s largest workplace relations advisor to more than 28,000 small and medium sized enterprises across Australia and New Zealand.

A genuine redundancy occurs when an employee’s job is no longer required for a business due to changes in operational requirements. New automated technology may replace roles, the employer may no longer be able to afford to keep a role on anymore, or a business might relocate, downsize, or close.

Conversely, a redundancy is not genuine if it is based predominantly on an employee’s performance or conduct, or if the employer has not gone through a procedurally fair process under the Fair Work Act.

“Employers need to clearly communicate with affected employees when considering redundancy, particularly now JobKeeper has ended. If an employer fails to comply, it can make it difficult to defend an unfair dismissal claim,” said Employsure Senior Advisor Thasnim Rahman.

“To ensure a business not only satisfies its obligations, but also avoids unnecessary disputes by employees, it is recommended a formal consultation process is undertaken and documented accordingly. An employer should not tell an employee they have made a definitive decision until the consultation has been completed.”

Employers are advised to go through a three-step process when making a redundancy. The first element of any redundancy process is warning staff their role may be at risk, and providing information in writing about the nature and expected effect of the proposed change. It is important to stress to employees at this stage no final decisions have been made.

Employers then need to consult with affected staff individually and ask them for their views on ways in which redundancy might be avoided. Objective selection criteria and redeployment opportunities also need to be discussed. If this part of the process is not considered and the employer has already made up their mind without hearing from staff, they may face an unfair dismissal claim.

The third and final meeting is where an outcome is determined. The employer must offer redeployment of the staff member to another role in the business if one is available. The employer has an obligation to offer any available alternative job for which the employee has suitable skills, experience, and qualifications. If the employee does not accept, or there is no alternative work, employment can then be terminated.

Employee management software like BrightHR can help employers manage rosters to see which roles can be better supported, and can also give an overview of employee hours worked as well as their location if the work takes place over multiple sites.

Business owners considering redundancy should work hard to move an employee into an alternative role. Under the Fair Work Act, employee’s made redundant are entitled to a payment depending on factors such as their length of service, size of their employer, or applicable industrial instrument, which in some cases are costly to the employer.

While some Awards have industry specific redundancies which differ from the Fair Work Act, in other scenarios, a redundancy payment is not required due to the nature of the employee’s employment arrangement.

“Some employment types which do not require a redundancy payment include casual employees, apprentices, trainees engaged only for the length of the training agreement, employees employed for a stated period of time or project, employees whose period of continuous service with the employer is less than 12 months, if the redundancy was due to the ordinary and customary turnover of labour, and employees terminated for serious misconduct,” continued Ms Rahman.

“Employers who run a small business with less than 15 employees may also be exempt from typical redundancy payment requirements.

“With JobKeeper at its end, employers should look at how to best manage their business without that extra financial cushioning. In some circumstances, a redundancy process is more trouble than it is worth for employers and can result in a larger expense than they anticipated,” she concluded.



Further enquiries:

Matthew Bridges

[email protected]

Have a question?

Have a question that hasn't been answered? Fill in the form below and one of our experts will contact you back.

  • This field is for validation purposes and should be left unchanged.

Call Now

1300 651 415

Live Chat

Click here