Redundancy Entitlements Exceptions

There are some circumstances where an employee whose job may have been made redundant will not be entitled to redundancy pay.

These circumstances are:

• The employee hands in their resignation without having an agreement in place with the employer to make a redundancy payment on termination.
• An employee is terminated due to misconduct or other reasons associated with the employees own performance or ability to do the job.
• The employer acquires other adequate employment for the employee.
• The employee has been employed for a period less than 12 months.
• The employee works for a small business. A business is considered to be a small business if the employer has less than 15 staff members.
• The employee had a contract or was employed for a fixed period of time that has come to an end.
• The employee was employed for an identified task or project.
• The employee is a trainee engaged only for the length of the training agreement.
• The employee is an apprentice.
• The employee was employed for a particular season.
• An employee was hired as a casual employee whose casual service is no longer needed.
• In a transfer of employment circumstance where it is proposed to transfer the employee to employment with a new employer.
• The employer is unable to pay the employee. This exception can only apply where Fair Work Australia relieves the employer from their redundancy pay obligations.

It is important to state that in a situation where an employee may not be entitled to redundancy pay, the employer will still be obligated to give notice, unless the employee has resigned or has been terminated due to serious misconduct.

Minimum notice periods.
An employer is obligated to give the following minimum notice periods when dismissing an employee:

Period of continuous service	Minimum notice period
Less than 1 year	1 week
1-3 years	2 weeks
3-5 years	3 weeks
over 5 years	4 weeks

An employee is entitled to an extra week of notice if they are over 45 years old and have worked for the employer for at least 2 years.

An award, registered agreement or employment contract can set out longer minimum notice periods, for example, 1 month as opposed to 1 week.

Redundancy and Unfair Dismissal

Employees who have been made redundant may still be able to make an unfair dismissal claim against their former employer if the correct procedure has not been followed during the termination process.

Under the Fair Work Act 2009, an employee is unable to make a claim for unfair dismissal in the case of a ‘genuine redundancy’, however what is the difference between a ‘redundancy’ and a ‘genuine redundancy’?

Redundancy occurs when an employer no longer wants a job being done by a specific employee to be carried out by anyone, meaning that the job would no longer exist, or if the employer becomes bankrupt or insolvent.

In order for it to be considered a ‘genuine redundancy’, the employer must follow any consultation requirements in the award or registered agreement before the redundancy takes place. Failure to perform any of these steps may end up in a terminated employee claiming that the redundancy was not genuine and filing an unfair dismissal claim.

If an employer has decided to implement major changes or restructuring that is going to affect employees significantly, the employer must take these steps

1. Notify the affected employee(s) of the proposed changes
2. Discuss the proposed changes with the affected employee(s), including possible measures to reduce the adverse effect on employee(s)
3. Give proper consideration to matters raised by affected employee(s)
4. Provide the affected employee(s) in writing with relevant information about the proposed changes, including the nature of the changes proposed and the expected effect on employees.

Discussions must be held as soon as possible after a decision has been made by the employer to make the intended changes.  Employees are entitled to have trade union representatives present at all discussions and the employers must also confer with the representative.

One unfair dismissal claim involves three employees of BananaCoast credit union Ltd. Their roles were made redundant, but they learned a few months later that their employers had hired workers in very similar positions.

All though they were out of the fourteen day lodgement period, the Fair Work Commission found the employees entitled to make unfair dismissal claims as they were unaware that at the time that their redundancy wasn’t genuine.

Another case in Victoria, Nitro Gym made an employee redundant without following the correct procedures and the employee filed an unfair dismissal claim. Fair Work Act Australia found that the redundancy was not a ‘genuine redundancy ‘and awarded the employee close to $8000 in compensation.

Redundancy and Small Businesses

Redundancy can occur when an employer either:

•    No longer needs an employee’s job done by anyone
•    Becomes bankrupt or insolvent
•    Introduces new technology and an employee’s job is no longer needed (can be done by a machine)
•    Slows down to lower production or sales
•    Relocates either overseas or interstate
•    Restructures or reorganises due to a takeover or merger

A small business is treated differently to other organizations. Defining whether or not your business is categorized as a ‘small business’ is indispensable when figuring out which options are available to you.

The Small Business Fair Dismissal Code came into operation on 1 July 2009 and is a very useful tool for small businesses dealing with redundancy.

A Small Business is defined as having fewer than 15 employees, including casual employees who are employed on a regular basis. Employees of a small business cannot make a claim for unfair dismissal within the first year of their employment. If an employee is dismissed after this initial period and the employer has followed the Small Business Fair Dismissal Code then the dismissal will be deemed to be fair.

Employees who have been dismissed due to business downturn or their position is no longer required cannot bring a claim for unfair dismissal. The redundancy must be genuine though. Hiring a new employee for the position is not a genuine redundancy.

If an employer believes on reasonable grounds that an employee’s behaviour is severe enough to justify immediate dismissal, they can do so without notice or warning. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair an allegation of theft, fraud or violence should be reported to the police. The employer must have reasonable grounds for making the report.

In other instances, the small business employer must give an employee a reason why they are at risk of being dismissed. The explanation must be a valid reason based on the employee’s ability to conduct the job. The employee must be warned verbally or ideally in writing, that they are at risk of being dismissed if there is no improvement.

The small business employer must offer the employee an opportunity to respond to the warning and a reasonable chance to rectify the problem. This may involve the employer providing supplementary training and ensuring the employee knows their job description and what is expected of them.
In consultations with an employee where dismissal is possible, the employee can have another person present to assist, the other person however cannot be acting in a professional capacity.


A small business employer will be obligated to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal, including evidence that a warning has been given (except in cases where the employee has been dismissed due to serious misconduct).

This may include copies of written warnings, a statement of termination or signed witness statements.

How to help those who keep their jobs following redundancies

Often those who remain in an organisation after their colleagues have been laid off experience feelings that can be compared to bereavement. This can have a huge impact on motivation, staff morale and stress levels, which in turn affects productivity and customer service.

Unless the change process is handled appropriately, reduced organisational effectiveness may result. Well planned and supported change processes will counter these consequences.

Staff that have kept their jobs often have feelings of resentment that they have to take on the workload of those who left. This can lead to an increase in stress levels. They also fear that if they fail to keep up with their increased workloads that they may be made redundant also.

Redundancies can lead to a loss of loyalty and trust in an organisation from remaining staff and leave them seeking the first opportunity to leave as they have lost faith in their bosses.

It is important for managers to ensure that staff who survive keep motivated as the company tries to move forward.

Some tips for doing this include –

• Give staff an opportunity to vent, this includes getting them to voice their hopes and fears for the future and acknowledge their worries. It helps to identify practical steps to help them achieve their goals. One of the most common complaints from staff in this situation is that they don’t feel they have been listened to
  
• Keep the lines of communication open throughout the redundancy process. This should help to alleviate some of their fears and reduce workplace gossip
  
• Train managers to look for signs of stress within their staff
  
• Monitor absenteeism and take action promptly if needed
  
• Retrain employees who will be taking on new roles
  
• It is helpful if those who remain in their jobs see that the staff who were made redundant are looked after. Give staff an opportunity to say goodbye, let them know that you appreciate the people leaving and recognise their achievements
  
• Identify one person to act as a change agent to work with staff and other supervisors during the implementation period. Throughout the process it is important that senior management in the organisation are available and present to talk to staff
  
• Staff reductions and restructure present a difficult task for all involved. It can be helpful to use symbols to mark key dates and successful transitions. For example, the creation of a change agent role mark the commencement of the process and the elimination of the same role would mark completion

Redundancy and Employer Obligations

Employees who are considering redundancy must ensure they are up to date with the Fair Work Act introduced in 2009. The Work Act is considerably different to the previous Work Choices legislation which made it easier for companies to make redundancies.

It’s worth engaging with external HR consultants who’ll be able to look at your HR policies and procedures with fresh eyes to ensure your redundancy processes are fully up to date.

According to the Fair Work Act, the employer must prove that the redundancy is genuine by establishing that the employer:

• No longer requires the person’s job to be performed by anyone because of changes to the operational requirements of the employer’s enterprise.

• Must abide by any obligation in a Modern Award or Enterprise Agreement to consult about redundancy; and

• Must show that it would not have been reasonable to reassign the employee a different position but within the same company or associated company.

A redundancy can also be offered where an employee’s duties have been reallocated to other departments or existing employees. This option is fairly common during uncertain economic times.

Consider if redeployment is an option, and if so, take into account the employee’s experience and qualifications in relation to other positions available within the company. Studies have shown that often employees welcome this option even if a reduction in hours and wages is necessary.

The Fair Work Act has also placed an emphasis on the consultation obligations with the affected employee by aiming to minimize the impact of the redundancy and ensuring employees are giving adequate support.

End2End Business Solutions can assist with the redundancy process by working with your business on a career transition program and employee consultations. We can provide hr strategies such as resume workshop and one to one career management sessions to ensure those employees affected by redundancy have the beset chance of moving forward with their careers. Contact End2End Business Solutions a call today to find out more or visit our website www.end2endbusinesssolutions.com.au