Redundancy Process Steps & Entitlements

What is a genuine redundancy?

A genuine redundancy is where you:

• No longer require a role to be performed due to changes in the operational requirements of the business,
• Comply with any requirement from a modern award or enterprise agreement to consult with the employee(s), and
• There is no reasonable opportunity to redeploy the employee(s) into your business or an associated entity.

What are the process steps for a redundancy?

Step 1 - Notify employees

• Notify affected employees in writing that their role is at risk of being made redundant and provide all relevant information about the changes, including:
  • the nature of the change, i.e. technological advancements, loss of contract, relocation, business sale, etc
  • the expected effect on employees, i.e. loss of their role, etc
  • any other matters likely to affect employees, i.e. the consultation process, redeployment options and criteria, redundancy entitlements, outplacement services, EAP, etc.
• Note, you do not need to disclose any confidential information if this would be contrary to the business’s interests.
• Invite the employee(s) to a consultation meeting with 24-48 hours’ notice. 

Step 2 - Consult with affected employees

• Meet with affected employees (and their representatives, if any) to discuss proposed changes, any entitlements to be paid, logistical matters (e.g. whether they will work the notice period or be paid in lieu, any process/selection criteria for remaining roles) and gather suggestions to minimise redundancies (e.g., reducing overtime, hours, taking leave, restructuring).
• Discuss and offer redeployment opportunities as an alternative to redundancy if available.
• Consider suggestions and input from employees.

Step 3 - Notify MyHR

• Upload consultation meeting notes and message MyHR in the relevant chat.
• If redeployment is available, confirm details of the offer.
• If there is no redeployment options available, confirm the employee’s last date of work and whether they will work their notice period. 

Step 4(a) - Formalise any offer of redeploment

• Provide the employee with an offer of redeployment letter and a contract, and confirm details, such the commencement date, terms of employment, location, remuneration, etc. 

Step 4(b) - Advise employees of redundancy

• Notify affected employees of redundancy.
• Provide the employee with the termination letter, and confirm details, such as whether the employee will work their notice or be paid in lieu, whether they will receive any redundancy pay and how much, any leave entitlements to be paid, the return of company equipment, and any additional benefits, such as EAP, job search entitlement, etc. 

What are the redundancy entitlements in Australia?

• Where an employee is made redundant, they may be entitled to redundancy pay in accordance with the table below.

• Note, small business employers are excluded from paying redundancy. A small business is one that employs less than 15 employees, including regular and systematic casual employees and employees of associated entities.
• Redundancy is paid at the employee’s base rate of pay for their ordinary hours of work, but doesn’t include loadings, allowances, overtime, penalty rates, etc.
• Where an award has an industry-specific redundancy clause, this will apply instead of the NES entitlement.
• Any outstanding entitlements also need to be paid out to employees, including any accrued and untaken annual leave and long service leave (where applicable).
• In addition, employees will be entitled to termination notice which will be based on the employee’s employment contract or the following minimum notice periods (whichever is greater):

• Employees over 45 years of age and who have worked for their employer for at least 2 years get an extra 1 week of notice.
• Notice may be worked by the employee or paid in lieu of the employee working it. If notice is paid in lieu, the amount paid to the employee must equal the full amount the employee would have been paid if they had worked until the end of the notice period, including loadings, allowances, overtime, penalty rates, etc.
• Award covered employees who are working out their notice period may have at least 1 paid day off per week of notice to look for another job. If the employee has been allowed paid leave for more than 1 day they must provide proof of attendance at an interview (e.g. a statutory declaration) if the employer requests it.

What is reasonable redeployment?

Whether a redeployment option is reasonable will depend on a range of circumstances, including: 

• whether there exists a job or a position or other work to which the employee can be redeployed
• the nature of any available position
• the qualifications required to perform the job
• the employee's skills, qualifications and experience, and
• the location of the job in relation to the employee's residence and the remuneration (pay and entitlements) which is offered.

Employers must also consider redeployment options within associated entities.