What is redundancy?

Redundancy is when an employer no longer needs to have a job performed by anyone — in other words, that the job the employee was doing has ceased to exist.

An employee whose job has been made redundant and whose employment is terminated may have an entitlement under statute, an industrial instrument or contract to redundancy or severance pay.

Redundancy pay is in addition to any payment in lieu of notice which the employee may also be entitled to receive on termination of their employment and payments for unused accrued paid leave entitlements.

See What is redundancy?

What are the redundancy pay entitlements under the NES?

The National Employment Standards (NES) provide a statutory entitlement to redundancy pay for most national system employees who have 12 months’ continuous employment, as set out in Pt 2-2, Div 11, Subdiv B of the Fair Work Act 2009 (Cth) (FW Act). Most businesses with fewer than 15 employees do not have to pay redundancy pay.

If a national system employee also has a right to redundancy pay under a contract of employment, award, agreement or other industrial instrument, or state legislation, these instruments remain applicable to the employee to the extent that they confer more generous redundancy terms than the minimum set down in the NES.

An employer may apply to the Fair Work Commission (FWC) to reduce the amount of NES redundancy pay owing to an employee if the employer offers other acceptable employment to the employee (irrespective of whether the employee accepts the alternative position) or the employer is not able to pay the amount of redundancy pay required by the NES. The FWC may determine that redundancy pay is reduced to nil.

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What happens in the case of a genuine redundancy?

If the dismissal is a “genuine redundancy” then that will be a complete defence to an unfair dismissal claim under Pt 3-2 of the FW Act is that the dismissal was not a case of genuine redundancy.

A genuine redundancy occurs where:

• • the employee’s job is no longer required to be performed by anyone, because of changes in the operational requirements of the employer’s enterprise or the insolvency or bankruptcy of the employer;
• • the employer has complied with any obligation in an applicable modern award or enterprise agreement to consult about the redundancy; and
• • the person's dismissal will not be a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within the employer's enterprise; or the enterprise of an associated entity of the employer.

Redundancy pay may not be payable where the job is no longer required to be done due to the ordinary and customary turnover of labour.

See What happens in the case of a genuine redundancy?