Redundancy Process: Getting It Right Legally and Ethically

Redundancy is one of the few management tasks where a technical error and a human error can each be equally costly. Get the legal process wrong and you risk an unfair dismissal claim; handle the human side badly and you damage the people who remain, your reputation, and your own conscience. The good news is that a genuine redundancy, run properly, is defensible and can be done with real decency. This is how the two sides fit together.

What makes a redundancy "genuine"

Under Australian law a redundancy is only genuine when the role, not the person, is no longer required. That distinction is everything. It typically arises from a real operational reason — restructuring, a downturn, automation, closing a location, or a function moving elsewhere. If the work still needs doing and you simply want a different person doing it, that is not a redundancy; it's a performance or conduct matter that needs an entirely different process.

For a redundancy to be genuine in the eyes of the Fair Work system, three things generally need to be true: the job is genuinely no longer required, you've complied with any consultation obligations in the applicable award or agreement, and it wasn't reasonable to redeploy the person elsewhere in your business or an associated entity. Miss any of those and even a well-intentioned redundancy can be found to be unfair.

Consultation is a legal obligation, not a courtesy

Most modern awards and enterprise agreements contain a consultation clause that applies when you're making major changes, including redundancies. This is not optional and it's not a formality you can back-fill afterwards. Consultation generally means notifying affected employees of the proposed change, giving them information about it, and genuinely discussing the effects and any measures to avoid or reduce them — before the final decision is locked in.

The word that trips people up is "genuine". If you've already decided, printed the letter and are merely informing the person, that is not consultation, and a tribunal can see the difference. Real consultation means you're prepared to listen to alternatives — reduced hours, redeployment, a different structure — and to be influenced by what you hear. Document what you discussed and when.

Redeployment: the step owners most often skip

Before you can treat a redundancy as genuine, you're expected to consider whether the person could reasonably be redeployed into another role in your business or a related one, including with reasonable retraining. In a small business the answer is often genuinely no — but you still have to turn your mind to it and be able to show you did. Sending an at-risk employee the current vacancies and having an honest conversation about them is both good practice and legal protection.

Getting the entitlements and notice right

When redundancy does proceed, the person is generally entitled to notice (or pay in lieu) and, depending on their length of service and the size of your business, redundancy pay scaled to how long they've worked for you. The specific notice periods and redundancy-pay scales are set out in the National Employment Standards and any applicable award, and small businesses can have different obligations — so calculate these from the current Fair Work Ombudsman information for your circumstances rather than from memory, because the details change and getting them wrong is a common and expensive mistake. Also settle accrued leave and any award or contractual extras at the same time.

Handling the conversation like a person

The legal process protects the business; how you conduct yourself protects everyone's dignity. A few things that consistently make a hard day less damaging:

• Do it in person and privately, never by message or in front of others. Give the person your full attention.
• Be honest and plain about why the role is going. People handle bad news; they don't handle feeling deceived.
• Offer practical support — a reference, time to look for work, notice worked or paid out generously where you can, and information about their entitlements in writing.
• Let them react without rushing to fill the silence. Shock, anger and grief are normal; your job is to be steady.

How you treat someone on their way out is watched closely by everyone staying, and it tells them what kind of employer you really are.

Look after the people who remain

Redundancies land on the survivors too. The people who keep their jobs will be anxious, will absorb extra work, and will judge the fairness of what they saw. Communicate honestly with the team about what's changed and why, acknowledge that it's hard, and be clear about what happens next. Silence breeds worse stories than the truth.

This is general information, not legal advice. Redundancy law is detailed and the specifics turn on the award, the employee's service and your business size, so confirm your obligations with the Fair Work Ombudsman or an employment law adviser before you act. Getting a genuine redundancy right protects your business and lets you treat people decently — the two aren't in tension.