Winning At Redundancy: How to Get The Best Package

Memorandum
  • Almost 40% of Australian jobs could be replaced by technology by 2025[1]
  • 3% of Australian workers lose their jobs as a result of corporate downsizing or closure[2]

Redundancy Defined

Redundancy occurs ‘not on account of any personal act or default of the employee … but because the employer no longer wishes the job the employee has been doing to be done by any one’.[3]

A genuine redundancy is when:

  1. there is a disappearance of a job or position;
  2. the employer has complied with the consultation obligations in the award, enterprise or agreement; and
  3. it would be unreasonable to redeploy the employee.

If a redundancy is not genuine, then the employee may have a case for unfair dismissal.

Redundancy Entitlements

The National Employment Standards (NES) under the Fair Work Act 2009 (Cth) entitles employees to a redundancy payment and sets out the minimum requirements. An employee’s redundancy entitlements may also arise from:

  • an award;
  • an enterprise agreement;
  • an Australian Workplace Agreement (AWA) or other statutory agreement;
  • a contract of employment; or
  • or a company policy.

Employees are entitled to receive redundancy pay based on their continuous period of service with their employer as below:

Period of continuous service Redundancy pay
At least 1 year but less than 2 years 4 weeks
At least 2 years but less than 3 years 6 weeks
At least 3 years but less than 4 years 7 weeks
At least 4 years but less than 5 years 8 weeks
At least 5 years but less than 6 years 10 weeks
At least 6 years but less than 7 years 11 weeks
At least 7 years but less than 8 years 13 weeks
At least 8 years but less than 9 years 14 weeks
At least 9 years but less than 10 years 16 weeks
At least 10 years 12 weeks

An employer can apply to the Fair Work Commission (FWC) to have the amount of redundancy they have to pay reduced if the employer finds other acceptable employment for the employee or the employer cannot afford the full redundancy amount.

Some employees are not entitled to get redundancy pay when their job is made redundant for example, if the employer has fewer than 15 employees at the time when notice is given.

Employer’s Obligations in Relation to Redundancy

The employer must

  1. provide reasonable notice to employees and / or their unions;
  2. notify the employees affected by the proposed changes and discuss those changes with the employees as soon as practicable;
  3. meet with the employee to inform him/her of the organisation’s decision regarding redundancy; and
  4. inform the employee in writing and include details such as the employee’s last day and entitlements upon redundancy.

Negotiating Your Redundancy

If possible, you should try to negotiate the terms of your redundancy to get the best package to put you in the best position post redundancy.

When negotiating your redundancy, you should:

  1. listen to what your employer has to say;
  2. know your legal entitlements;
  3. help your employer understand your situation in life and what redundancy means to you;
  4. set yourself apart from your colleagues;
  5. keep channels of communication open;
  6. ask open questions and keep detailed meeting minutes;
  7. understand who the key decision makers are; and
  8. consult with a lawyer before agreeing to any redundancy package

Despite the national requirements for minimum redundancy periods, in certain circumstances, significantly more can be negotiated as a severance pay from your employer, particularly where the redundancy is not a genuine redundancy.  We practice and specialise in this area of law.  Should you have any queries, please contact Margaret Pavey on (02) 9264 4833 or Rebecca Fahey on (03) 9600 2450.

[1] The Committee for Economic Development of Australia (CEDA), Australia’s Future Workforce? (June 2015).

[2] Anna Patty, ‘Australia has a comparatively high rate of worker redundancies following corporate downsizes’, The Sydney Morning Herald (online) 8 April 2016 < https://www.smh.com.au/business/careers/australia-has-a-comparatively-high-rate-of-worker-redundancies-following-corporate-downsizes-20160407-go0yme.html >.

[3] Redundancy Case (2004) 129 IR 155.

Leave a Reply

Your email address will not be published. Required fields are marked *