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Redundancy is a commonly misunderstood term. While many think that it is simply another way of describing the termination of employment, it more correctly refers to the specific situation where an employer terminates an employee’s employment because the employer no longer requires the employee’s job to be done by anyone.
Under the Fair Work Act 2009 (Cth), you may have grounds to pursue an unfair dismissal claim if your employment is terminated by way of redundancy and the redundancy was not “genuine”. In order for a redundancy to be genuine, three criteria must be satisfied:
- the employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise;
- the employer complied with any obligation to consult about the redundancy in a modern award or enterprise agreement; and
- it would not have been reasonable for the person to be redeployed within the employer’s enterprise or an associated entity’s enterprise.
You may accept that your redundancy is “genuine” (because your employer no longer requires your job to be performed, you were consulted about the redundancy and there were no reasonable redeployment opportunities) but question the amount of redundancy pay. This amount is generally determined by the employee’s period of continuous service.
How much redundancy are you entitled to?
Under the National Employment Standards, an employer must, at a minimum, pay the following amounts to an employee whose employment is terminated by way of redundancy.
|Period of continuous service||Redundancy|
|At least 1 year but less than 2 years||4 Weeks|
|At least 2 years but less than 3 years||6 Weeks|
|At least 3 years but less than 4 years||7 Weeks|
|At least 4 years but less than 5 years||8 Weeks|
|At least 5 years but less than 6 years||10 Weeks|
|At least 6 years but less than 7 years||11 Weeks|
|At least 7 years but less than 8 years||13 Weeks|
|At least 8 years but less than 9 years||14 Weeks|
|At least 9 years but less than 10 years||16 Weeks|
|At least 10 years||12 Weeks*|
*Reduced redundancy pay compensated for by long service leave entitlements.
You may, however, be entitled to a higher sum under your contract of employment, the company redundancy policy, a modern award or an enterprise agreement.
It is important that you approach the redundancy process carefully, as there is a risk that you may – depending on the circumstances – forego your redundancy entitlements if you resign before your redundancy has formally taken effect or if you turn down a reasonable offer of redeployment. Our employment lawyers can guide you this process to ensure that you get the full amount you are owed.