Redundancy Laws in Australia: A Guide for HR Managers and Small Business Owners

Redundancy Laws in Australia: A Guide for HR Managers and Small Business Owners

Redundancy is a common business reality—but in Australia, failing to follow the correct legal process can expose your business to serious legal and financial risk. This guide breaks down redundancy laws in plain English, with practical advice for HR Managers, directors, and small business owners.

We also explore a fictional case study showing how redundancy can go wrong if the rules aren’t followed.

 

What Is a Genuine Redundancy Under Australian Law?

Under the Fair Work Act 2009 (Cth), a redundancy is genuine if:

  • The role is no longer required to be performed by anyone;
  • The employer has consulted with the affected employee (as required under any modern award or enterprise agreement); and
  • There are no reasonable redeployment opportunities in the business or associated entities.

Failing to meet these requirements can result in an unfair dismissal claim.

NES Redundancy Pay Entitlements

The National Employment Standards (NES) outline redundancy pay based on years of continuous service. Click here for minimum entitlements

Fictional Case Study: How Not to Handle a Redundancy

This case study is fictional and provided for educational purposes only.

Bluefield Services Pty Ltd is a 25-person business in regional NSW. Facing a downturn, management decided to cut costs. Michael, a Warehouse Supervisor with 12 years of service, was told his position was redundant.

Where they went wrong:

  • No formal consultation under the Clerks Award
  • No redeployment opportunities were explored
  • Michael wasn’t allowed a support person
  • No mention of his NES entitlements in the termination letter

Outcome:
Michael filed an unfair dismissal claim. The Fair Work Commission found the redundancy was not genuine and ordered compensation of $18,000.

Your Redundancy Checklist for Compliance

  1. Prepare a clear business case (document your reasons)
  2. Review modern award or EBA obligations
  3. Consult with affected employees and allow a support person
  4. Consider redeployment options (internally and across entities)
  5. Pay correct redundancy entitlements under the NES
  • Don’t use redundancy to terminate poor performers

Frequently Asked Questions

Q: Do small businesses have to pay redundancy?
A: Not always. Businesses with fewer than 15 employees (based on headcount) may be exempt under the NES. But they must still follow consultation, notice, and redeployment obligations.

Q: Can redundancy be challenged?
A: Yes. If the redundancy is not genuine or the process is flawed, the employee may bring an unfair dismissal or general protections claim.

Q: Can I make someone redundant without warning?
A: No. Most awards require prior consultation, and best practice is to provide notice and allow employee feedback.

Need Help?

At ER Focus, we support businesses through complex restructuring, including:

  • Redundancy business case development
  • Employee consultation processes
  • Calculating entitlements
  • Managing risks around unfair dismissal

Contact us today to make sure your restructure is fair, compliant, and legally defensible.

Disclaimer: This article is general information only and not legal advice. For tailored advice, consult a qualified employment relations expert or lawyer.