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.