I Was Made Redundant. What Does This Mean?
Generally, an employee is said to be made “redundant” when the employer dismisses the employee because the employee’s job is no longer required to be done by the employee or anyone else.
An employer may be justified in making the employee’s job redundant if the business is undergoing changes in operational requirements. A business that is undergoing changes in operational requirements is to be distinguished from a business that is simply experiencing an ordinary and customary turnover of labour.
An employee may also be made redundant upon the employer’s insolvency or bankruptcy. Visit Bankruptcy & Liquidation for more information.
What Are My Entitlements Upon Being Made Redundant?
That depends on whether you are covered by the “federal system” or not. If you are covered by the “federal system”, the Commonwealth Government’s Fair Work Act will apply to you. If not, your State will likely have redundancy laws for your situation. Most people are covered by the federal system. However, contact us for help in determining which system applies to you.
If you are covered by the federal system, the Fair Work Act entitles you to a minimum amount of redundancy pay in certain situations. You may have a registered agreement, award, or employment contract that provides for an even greater amount of redundancy pay.
Under the Fair Work Act, however, redundancy pay is calculated as follows:
|Employee’s Period of Continuous Service||Redundancy Pay|
|At least 1 year but less than 2 years||4 weeks of Ordinary Pay|
|At least 2 years but less than 3 years||6 weeks of Ordinary Pay|
|At least 3 years but less than 4 years||7 weeks of Ordinary Pay|
|At least 4 years but less than 5 years||8 weeks of Ordinary Pay|
|At least 5 years but less than 6 years||10 weeks of Ordinary Pay|
|At least 6 years but less than 7 years||11 weeks of Ordinary Pay|
|At least 7 years but less than 8 years||13 weeks of Ordinary Pay|
|At least 8 years but less than 9 years||14 weeks of Ordinary Pay|
|At least 9 years but less than 10 years||16 weeks of Ordinary Pay|
|At least 10 years||12 weeks of Ordinary Pay|
Under the Fair Work Act, a business with less than 15 employees is generally excluded from paying redundancy pay.
Note that there are other situations when the above table does not apply. For example, casual employees and employees who have not worked for at least 1 year will not be eligible for redundancy pay under the Fair Work Act.
Also note that redundancy pay is different to notice or payment in lieu of notice. You may be entitled to both redundancy pay and payment in lieu of notice. Visit Notice & Final Pay for more information about notice and payment in lieu of notice.
What About My Non-monetary Entitlements?
If you are covered by a registered agreement or an award, you may also be entitled to consultation as to redundancy. The registered agreement or award may require the employer to consult with the employee whenever there are major changes in the business that may result in redundancies. If you do not receive such consultation, you may be entitled to lodge an unfair dismissal claim.