Redundancy is one of the most challenging processes for any organisation — both legally and emotionally. It requires careful planning, compliance with multiple legal frameworks, and fair treatment of affected employees. This guide outlines the key steps and obligations employers must follow to implement redundancies lawfully and minimise legal risk.

What Is a Redundancy?

A redundancy occurs when an employer decides it no longer requires a role to be performed by anyone by the employer. The reason must relate to operational needs, not any fault of the employee. This may happen due to:

• Business downturn or restructure,
• Closure of a site or business unit,
• Completion of a project,
• Outsourcing

Step 1: Document the Business Rationale

Before commencing any process, employers should clearly document the reasons for the proposed redundancy. This helps demonstrate that the decision was operational, not personal, and provides strong evidence if a claim is made later — for example, under unfair dismissal, discrimination, or general protections laws.

Step 2: Identify Legal Obligations

Redundancy obligations and entitlements may arise under several legal sources:

• Fair Work Act 2009 (Cth) (FW Act) — including redundancy pay, consultation, notice, and unfair dismissal protections.
• Modern awards or enterprise agreements.
• Employment contracts and workplace policies.
• Anti-discrimination and workers’ compensation legislation.

Key FW Act obligations include:

• Redundancy pay entitlements under the National Employment Standards (NES).
• Unfair dismissal jurisdictional requirements (genuine redundancy).
• Special consultation and notification rules if 15 or more employees are affected.
• Ensuring dismissals are not for unlawful reasons (e.g. discrimination or adverse action).

Step 3: Develop a Redundancy Strategy

A well-structured redundancy strategy or business plan helps ensure compliance and clear communication. This should cover:

• Business reasons and any mitigation strategies.
• Consultation and redeployment processes.
• Selection criteria and documentation protocols.
• Communication with employees, unions and other stakeholders.
• Outplacement or support options for affected staff.

Step 4: Consult with Employees

Most modern awards and all enterprise agreements impose consultation obligations. Employers must:

• Notify employees as soon as a definite decision is made.
• Provide clear information about the proposed changes.
• Discuss the impact on employees and ways to mitigate adverse effects.
• Give employees a genuine opportunity to respond — though final decision-making remains with the employer.

Step 5: Selection Process

If multiple roles are affected, a fair and objective selection process is essential. Employers should:

• Use clear, non-discriminatory criteria based on skills, experience, and operational requirements.
• Avoid selection based on age, gender, injury, or other protected attributes.
• Document the process carefully to support the fairness of decisions.

Step 6: Redeployment and Suitable Alternative Employment

Before proceeding to termination, employers must consider reasonable redeployment opportunities for those employees covered by the unfair dismissal regime:

• Within the organisation or associated entities.
• In some cases, with an external employer (acceptable employment).

If reasonable redeployment exists and is not offered, the redundancy may not be considered “genuine” under the FW Act.

Step 7: Redundancy Pay and Notice

Under the NES, eligible employees are entitled to:

• Redundancy pay based on years of service (unless an exclusion applies, such as small business employers or casual employees).
• Notice of termination or payment in lieu of notice.
  Additional entitlements may arise from awards, agreements or contracts.

Exclusions from statutory redundancy pay include:

• Employees with under 12 months’ service.
• Fixed-term or seasonal employees.
• Casuals, apprentices, and some industry-specific schemes.

Step 8: Communication and Record-Keeping

Clear and compassionate communication is essential throughout the process. Employers should:

• Provide written notice of redundancy decisions.
• Document consultation, selection, and redeployment steps.
• Retain records in case of later disputes or legal claims.