Genuine redundancy meaning & payments

By Vivian Michael | Employment

Genuine redundancy meaning & payments

Photo credit: Alex Knight, Unsplash

Below is a simple guide to genuine redundancy.

A redundancy is genuine if you no longer need a position because of business changes and there has been consultation with the employee per any award or enterprise agreement that applies.

And, it won’t be a case of genuine redundancy if redeployment was an unexplored option in the employer’s entity or an associated entity. 

Next, let's look at some ideas to help you avoid legal trouble.

Avoid legal trouble

Now, it's wise to consult with your employees and follow the process that's typically included in an award (even if an award does not apply) for risk management.

So, here's what it takes to comply with a consultation clause

  • as soon as a definite decision has been made, notify the changes to all employees; and
  • discuss with the affected employees the changes, likely effect and measures to avoid or reduce adverse effects; and
  • write to the affected employees about the change and include the nature, likely effect and other matters to impact employees.

You should also explore and offer suitable jobs.

Also, you should get legal advice if you are unsure about any of the steps.

Further, here are some easily avoidable scenarios that usually lead to an employee making a claim against an employer: 

  • Immediate dismissal with no consultation; or
  • Job ad for the employee's former role appears; or 
  • Suitable positions the employee could have taken up. 

Now, let's look at when employees are paid redundancy pay.

When employees are paid

Redundancy is paid if these criteria below are met:

  • the employer has more than 15 employees; and
  • it is a case of genuine redundancy; and
  • there's been 12 months or more work history. 

However, a small business with fewer than 15 employees won't have to pay (section 121 Fair Work Act 2009 (Cth)).

How much $?

Minimum redundancy pay is in section 119 of the Fair Work Act and below. 

Finally, if an employment contract or enterprise agreement has more favourable terms, then those will apply and override the Fair Work Act.





Do you need help from an Australian business lawyer for startups? Contact us today for help on info@michaellawgroup.com.au or 1300 478 278 Australia wide or on +61 2 9151 7233 from overseas. We are always glad to help.

About the Author

Vivian Michael is a lawyer and founder of Michael Law Group. Vivian's mission is to make quality business legal services accessible to startups that would otherwise DIY, rely on legacy contracts or go without.

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