In Australia, redundancy is a serious topic that you need to understand as an employer. Making an employee redundant without following the correct procedure can have serious consequences and, in bad cases, can even lead to unfair dismissal claims against you.
Because of this, we decided to put together a short guide to help you decide whether or not you can legally make a position redundant. As always, remember that this information is not meant as legal advice and that you should always speak with an experienced lawyer if you’re unsure about your rights and responsibilities.
First, What Is Meant By Redundancy?
Redundancy refers to the act of terminating an employee’s contract because their position is no longer required. In general, there are two situations which can result in legal redundancy. They include:
- When an employee’s job doesn’t need to be done anymore. This may be because of new technology, a shift in workplace procedure, or because their role has been merged with another.
- When a company goes bankrupt or otherwise shuts down, meaning there isn’t a job to do anymore.
A few examples of situations where an employee can be legally made redundant include:
- When new technology or machinery is introduced to the workplace that takes over work that was previously performed by the person in question.
- When a business downsizes, and thus requires fewer employees.
- When a business closes down or relocates to a different state or country.
- When a business’s structure changes due to a merger or takeover.
Remember that it’s extremely important to ensure you’re following the rules if you decide to make a position redundant. Otherwise, you may end up facing serious penalties.
What Are My Responsibilities When Making a Position Redundant?
As an employer, you have a number of responsibilities and legal requirements when you decide to make a position redundant. These include:
Redundancy pay – First, you should expect to have to pay some sort of redundancy bonus to the employee whose contract you’re terminating. The exact amount will depend on the length of time that they’ve worked for you, the industry you’re in, and whether or not you’re covered by a registered agreement.
Consultation – You also have to sit down and speak with the employee(s) in question to ensure they’re aware of the situation and why their contract is being terminated. Your consultation obligations will vary according to your industry, but generally include providing notice and information about the redundancy and the employee’s options going forward.
Providing reasonable redeployment – If possible, you have a responsibility to redeploy the affected employee(s) to a different role within the company. Make sure you at least consider your options here to reduce the risk of any unfair dismissal claims.
Ultimately, making a position redundant can be a little complicated, especially if it’s not something you’ve done before. Australian law does allow an employer to terminate an employment contract when redundancy is necessary, but it’s important to follow the rules to avoid legal penalties. If you’re confused or unsure about anything, we’d highly recommend speaking with an employment lawyer to ensure you’re covered.