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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.

Comments 4

  1. Hello. I am facing a redundancy which I believe is not genuine. I am a high performing employee and very puzzled at why I am facing a redundancy. I am a woman in my 40’s and i need to ensure I get a very good redundancy package for myself considering the amount of my time that has been wasted and career opportunities forgone.

  2. i dont get why less than 10 years gets more weeks pay than over 10 years? we are being made redundant and hubby will have been with coles 15 years 🙁

  3. Good afternoon Rebecca

    My employer (Leisure Management Services) trading as Bayfit Leisure Centre has assigned the business that I work at, to another company called Bluefit. In an emailed letter sent to me on 4th Oct 2018, it stated that I was being offered a redundancy package which was retracted at a latter date.

    This is part of the wording of that email and associated letter of termination.

    “Bluefit will assume the operation of the facility as of the 1st November 2018”.

    “Unfortunately Bluefit is unable to offer you a position in their company, therefore we are forced to cease your employment with Leisure Management Services as at 31 October 2018”.

    An excerpt from that attached letter states the following:

    “As the reason for the termination of employment with LMS is redundancy, you will also be paid the appropriate redundancy pay depending on your length of service.

    I have been employed for just on ten years, and have expressed a desire to accept the redundancy package.
    It has since been retracted stating that they had advocated on my behalf and have since found employment with Bluefit.

    I had expressed a desire to accept the redundancy package and had not given them authority to advocate on my behalf regarding this matter.

    From what understand about what I have read on the internet, relating to the rules and regulations:

    Once a notice of redundancy has been issued to an employee, it is legally binding and cannot be unilaterally withdrawn. by an employer, even if the employer is still working out his or her notice period. This applies even if there is a change of circumstance and the employer finds a position of employment

    I have emailed LMS on repeated occasions with my expressed wishes and my interpretations of the regulations. Till this date they have not replied, and have ignored all my emails.

    Please advise if my interpretation of what I have read on the internet is correct; and how I should respond to the employer.

    Please reply asap because I am expected to take up a new position at Bluefit on the 5th November 2018. If I accept that position; would I lose the right to claim the redundancy package that had been offered to me and then retracted at a latter date.

    All of this occured while I was on an overseas trip in Greece. I am due back in Australia on 2nd November 2018. I will likely be required to inform the the new employer (Bluefit) whether I wish to stay on in the new position. I therefore need advice on whether accepting a new position harms my claim for a redundancy package.

    Please reply by email.

    Kind Regards

    Charles Lacharis

  4. I received an offer of redundancy as my department did a restructure which affects my job and no longer needed. I have been working since Jan 2016 and I would like to get some advice how to negotiate for a very good package. I am aiming for this since the timing of loosing my job is within the christmas and end of year break which I find it difficult to find replacement job. Can you please help to provide immediate feedback as I am schedule to meet our HR this monday, Nov 12 4pm. Thank you!

    My mobile is 0481523083.

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