MKI Legal has expertise in advising both businesses and employees about their redundancy rights. We work in this area constantly so we tend to see the same issues over and again. We can therefore provide you with accurate advice in an efficient manner.
Redundancy occurs when a job is terminated because the business no longer requires that specific job to be done by anyone. Redundancy can present a number of challenges to ensure the law is properly followed.
Correct redundancy pay
The employee must be paid the correct redundancy pay. Usually this will be the payment specified under the contract, provided it is no less than the minimum entitlements under law, which in most cases is the minimum set out under the Fair Work Act. If the contract does not specify the amount of pay required, then the law sets out the minimum, which we explain further below.
Correct procedures must be followed. If the business does not follow the correct procedures, then this can give the employee rights to lodge an unfair dismissal claim. For example, businesses are under an obligation to see if they can find alternative work for employees before making any final decisions.
Many businesses are required to give employees notice before any redundancy occurs. This is known as consultation and it is an opportunity for employees to have their say before the business makes a final decision. Again, if this obligation is not carried out correctly, employees may have the right to lodge a claim.
It cannot be a sham redundancy
Usually when an employee has been made redundant, it is important to consider whether it occurred genuinely or if the business is simply trying to create the appearance of making the employee redundant as an excuse to dismiss that employee. This happens more frequently than it should, and we have a lot of experience in dealing with “sham redundancies”.
Minimum entitlements (Federal System)
The Federal legislation known as the Fair Work Act applies to most businesses and employees in Australia. Businesses who run their enterprise through a company structure are covered by this Act, and so are their employees.
The Fair Work Act sets out the minimum amount of redundancy pay employees are entitled to, which depends on the length of service. These minimums are currently determined as follows:
|Period of service||Payout|
|1 year to 2 years:||4 weeks|
|2 years to 3 years:||6 weeks|
|3 years to 4 years:||7 weeks|
|4 years to 5 years:||8 weeks|
|5 years to 6 years:||10 weeks|
|6 years to 7 years:||11 weeks|
|7 years to 8 years:||13 weeks|
|8 years to 9 years:||14 weeks|
|9 years to 10 years:||16 weeks|
|10 years plus:||12 weeks|
Excluded from redundancy pay
The following employees are not entitled to this form of payment under the Fair Work Act:
- one hired for a specified period of time, for a specified task, or for the duration of a specified season;
- one whose job is terminated because of serious misconduct;
- a casual employee;
- one (other than an apprentice) to whom a training arrangement applies and whose job is for a specified period of time or is, for any reason, limited to the duration of the training arrangement;
- one prescribed by the regulations as an employee to whom these provisions do not apply, such as an employee employed by a small business (that is a business employing fewer than 15 employees);
- one who is an apprentice;
- one to whom an industry-specific redundancy scheme in a modern award applies; or
- one to whom a redundancy scheme in an enterprise agreement applies if:
- it is an industry-specific scheme that is incorporated by reference (and as in force from time to time) into the enterprise agreement from a modern award that is in operation; and
- the employee is covered by the industry-specific scheme in the modern award.
If you have been made redundant, contact us for a free discussion about your rights.