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Are you an employer having to consider redundancies?

If so, we’re sorry to hear that. It’s important that you get your redundancies right.

There are many regulations in place regarding redundancy – and it’s important that you get it right if you choose to make a significant change or terminate employees due to redundancy.

There are also many alternatives to redundancy, including stand downs (if applicable to your business), requesting that employees take accrued or unpaid leave, and more.

If you are having to consider redundancies due to the ongoing outbreak of COVID-19, we can give you free, initial advice on how to approach these new challenges and what your obligations and rights are.

We are here to help. Ring us up and we can give you free, initial advice on redundancy. Ask us any question you like – about redundancy pay, or redundancy entitlements, for example. Our friendly staff can help point you in the right direction.

Call us now and see how we can help your business.

Armadillo and Customline Campers, QLD
Employsure Client

More than 30,000 business owners trust Employsure’s expert advice on managing employee redundancies.

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The redundancy process is hard. We can make it simple.

Making an employee redundant can be tricky and confusing. Fair process, ensuring genuine redundancies and calculating payouts makes the process difficult. Meanwhile the Fair Work Act includes provisions employers must meet when considering a redundancy.

As one of the leading workplace relations specialists, we can:

  • Clarify whether the termination of the employee complies with redundancy provisions in the Fair Work Act
  • Calculate the correct amount of redundancy pay that the redundant employee is entitled to
  • Discuss alternative cost-effective methods of dealing with the employee
  • Keep you up to date with future developments that impact workplace relations during the COVID-19 crisis
  • Call us today and see how we can help.

    We recently had a very difficult employee issue and [Employsure] was invaluable in guiding and assisting us."

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    Because we're confident you’ll find the Employsure experience so beneficial, we’re happy to offer this initial consultation free of charge.

    This way, if you encounter more complex, ongoing issues with the Fair Work Act, you’ll already know that Employsure are the experts you can trust.

    Besides, who do you have to support you?

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    What is a genuine redundancy?

    A genuine redundancy occurs when:

    • An employer no longer requires a person’s job to be performed by anyone due to operational changes; and
    • The employer has complied with consultation provisions contained within any applicable modern award or enterprise agreement.

    It is not a case of genuine redundancy if the employee can be reasonably redeployed somewhere else in the business or in an associated entity.

    When can you make an employee redundant?

    An employee can be made redundant at any time.

    However, prior to making an employee redundant, an employer should generally consult with an employee.

    If an employee is on parental leave, an employer is required to take all reasonable steps to give:

    • the employee information about the change;
    • an opportunity to discuss the change; and
    • an explanation as to the effect of the decision on their position.

    Although an employee can be made redundant at any time, where applicable, employers are still required to provide the minimum notice period.

    How do I make an employee redundant?

    There is no set process required to make an employee redundant.

    However, the process adopted should reflect the consultation provisions contained within any applicable modern award or enterprise agreement.

    What is the process of redundancy?

    There is no one size fits all approach to redundancy. Every business is unique and responds differently to various challenges. Accordingly, redundancy processes should be customised to reflect the individual business.

    An example of a best practice redundancy process is outlined below:

    Step 1: Consult with Staff (At-Risk Meeting)

    Once a decision has been made to introduce change, a business should inform staff of the proposed changes. This announcement can be made verbally or in writing. At the meeting, management should inform staff of their intention to make changes and the reasons why; that positions are likely to be made redundant; and that the company will be exploring alternatives and, if that is not feasible, considering options for redeployment for any impacted persons.

    At the meeting, management should also inform staff of the next steps, which is to meet with impacted employees to discuss the situation in more depth.

    Following the meeting, it is considered best practice to provide written confirmation of what was said during the meeting and to formally provide details of the next steps.

    Step 2: Consultation

    Consultation should be conducted in accordance with the consultation terms contained within any applicable modern award or enterprise agreement.

    For a redundancy to be genuine, consultation must be meaningful. This means an employer should provide an opportunity for the employee to express their viewpoint, ask questions and raise alternatives to the redundancy. The parties might also take this opportunity to explore redeployment.

    Consultation is not a mere formality. As such, in many circumstances more than one consultation meeting may be required, particularly where employees are being selected as part of a group according to selection criteria.

    Step 3: Redeployment

    If there is potential for redeployment, this option should be formally put to the employee. It is considered best practice for any offer to be made in writing. An employee should be given reasonable time to consider and respond to any proposal.

    If the offer of redeployment is accepted, changes should be documented in writing.

    If there is no opportunity for redeployment, proceed to confirmation of redundancy.

    Step 4: Confirmation of Redundancy

    Following the consultation, should the employer proceed with the redundancy, each employee should be called into a final meeting to tell them the outcome pending any final comments and confirmation in writing. Assuming that no relevant final comments are made to avoid redundancy, the outcome should be confirmed in writing following the meeting. Under the National Employment Standards an employer must give an employee notice of termination in writing.

    What is the notice period for redundancy?

    When making an employee redundant, an employer needs to provide notice. The notice period varies on the length of the employee’s service. This is separate and distinct from severance/redundancy pay.

    If an employee has worked less than one year, they must be given one week’s notice. Between one and three years, that notice period is two weeks. Between three and five years, the notice period goes up to three weeks. For employees made redundant after over five years of service, the notice period is four weeks.

    An additional week’s notice should be provided for any employee over the age of 45 and who has completed at least 2 years’ service with the business

    Employers may allow the employees to work out the notice period, or make a payment in lieu of notice. If payment in lieu is made, then that has to be included to the employee’s full redundancy payment.

    What is the difference between dismissal and redundancy?

    Dismissal is a general term used to describe employment coming to an end at the initiative of the employer.

    Redundancy is when an employee’s employment is terminated as the role they’re filling is no longer required by the employer. Redundancy can also be caused by a change in business conditions –eg the business needs or downsizing a business.

    Is termination of employment the same as redundancy?

    Termination of employment is a general term used to describe employment coming to an end. This can occur in a number of different ways including, but not limited to, dismissal, breach of contract, resignation, abandonment of employment and redundancy.

    A redundancy is a specific type of termination that occurs when an employer no longer requires an employee's job to be done by anyone or in circumstances when the employer becomes insolvent or bankrupt.

    When is redundancy unfair?

    A redundancy is unfair when the dismissal was not a case of ‘genuine redundancy’.

    A redundancy is genuine when:

    • An employer no longer requires a job to be performed by anyone because of changes in operational requirements; and
    • An employer has complied with any obligation imposed.

    A redundancy is not genuine if it would have been reasonable to redeploy the person elsewhere within the employer’s enterprise.

    How is redundancy pay calculated?

    Redundancy pay is calculated as follows:

    Base Rate of Pay x Redundancy Pay Period = Redundancy Pay

    If an employee is covered by the National Employment Standards, the redundancy pay period is based upon the employee’s length of service.

    If the redundancy provisions of the National Employment Standards apply, an employee’s redundancy paid is paid at their base pay for ordinary hours worked.

    An employee’s base rate of pay does not ordinarily include:

    • overtime;
    • penalty rates;
    • loadings;
    • allowances; and
    • bonuses.

    Please be aware that modern awards, enterprise agreements and contracts of employment might require different inclusions.

    What is the minimum redundancy pay?

    The minimum amount of redundancy pay will depend on whether an employee is covered by an award or enterprise agreement.

    If the terms of the National Employment Standards apply, the entitlement is based on the length of employment.

    If an employee is employed for less than one year, they would not be entitled to redundancy pay.

    However, if the employee has been employed for at least one year, but less than two, they would be entitled to 4 weeks. This is the minimum amount payable pursuant to the National Employment Standards.

    The minimum redundancy pay may be higher depending on the modern award or enterprise bargaining agreement the employee is under.

    When should redundancy be paid?

    An employer has to pay an employee redundancy pay in accordance with the terms of any applicable modern award, registered agreement or the contract of employment.

    The majority of modern awards require payment of unpaid wages and other amounts to be made within 7 days after the day on which the employee’s employment terminates. However, some modern awards and enterprise agreements require payment to be made sooner.

    How is voluntary redundancy calculated?

    As a general rule, an employee who accepts voluntary redundancy will be entitled to the same entitlements as they would have received had been made redundant. This is because voluntary redundancy is still viewed as termination rather than resignation.

    Aside from basic redundancy entitlements, an employee would also be entitled to receive other entitlements such as untaken annual leave, long service leave (if applicable) and notice of termination.

    Customarily an ex-gratia payment is made to recognise the employee’s contribution to the organisation and / or to incentivise them to leave the organisation amicably.

    What is included in redundancy payments?

    If the redundancy provisions of the National Employment Standards apply, an employee’s redundancy paid is paid at their base pay for ordinary hours worked.

    An employee’s base rate of pay does not ordinarily include:

    • overtime;
    • penalty rates;
    • loadings;
    • allowances; and
    • bonuses.

    Please be aware that modern awards, enterprise agreements and contracts of employment might require different inclusions.

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