Thursday, 15 September 2016

"Your role is redundant". What does that mean?

Recently I've had a few questions about redundancy. What it means, what the payments are, and what happens if you see your old job advertised after you have been made redundant.

What to do when told redundant

What is redundancy?

There are two definitions we can review. One is from the Fair Work Act (FWA), and the other from the Australian Taxation Office (ATO).
When the FWA definition is met, the employee has no right to an unfair dismissal claim. According to Fair Work, a redundancy has occurred when:
  • the employer doesn't need the employee's job to be done by anyone, or, the employer becomes bankrupt or insolvent, AND
  • the employer has consulted with the employees as required by the Award or Enterprise Agreement, AND
  • the employer is unable to redeploy the employee into another role
The ATO definition is important because if their definition is not met, you may not be entitled to the tax concessions received for redundancy payments. The ATO considers it a genuine redundancy when the job you were doing has been abolished.

What happens if I don't think my role is redundant?

The first thing to consider is the above Fair Work definition. If the employer has not met that criteria, you can make an unfair dismissal claim, but you only have 21 days to do this. Check out the Fair Work website here for more information.

My employer has redeployed me into a new role, but I just want a redundancy payment!

It is true that not everyone is happy to be given an alternative role in the Company, but the Fair Work definition of a redundancy does put an onus on the organisation to find you acceptable alternative employment. 
There have been cases where Fair Work has deemed that the employee is not entitled to redundancy pay where they have refused an alternative role, so make sure you obtain some advice before rejecting any offer of redeployment. 

How do I work out my redundancy payment?

No matter what your contract or enterprise agreement states, as a MINIMUM you must receive the redundancy pay given in the National Employment Standards (NES), if you meet the criteria. You can find the table related to redundancy pay and the criteria that needs to be met (e.g. not be a casual employee, have a minimum of 12 months service, be employed in a business with more than 15 employees etc.) on the FairWork website here
It is also important to note that if you had no redundancy pay provision in your Contract of Employment or Enterprise Agreement prior to 1 January 2010 (when the NES came into effect), then your "years of service" for the purposes of redundancy pay does NOT count prior to that date. So, even if you were employed in 2004, but had no redundancy pay provision in your contract/EA, then the most you would receive today is 11 weeks (for at least 6 years, but less than seven years service).
Additionally, redundancy pay is based on your normal hours as at the date of redundancy. So if you are working part time, even if you worked full time for many years before, the payment is based on your part time rate.

What if I started as a casual, and then became a permanent employee?

Recently a full bench decision at the Fair Work Commission enabled workers who started as casuals, before their positions become permanent, to have their full length of service recognised in the calculation of their final pay out. The Sydney Morning Herald article regarding this case can be found here. As this is a fairly recent case, many employers could be unaware of this decision, so if you find yourself in this situation and your employer is not recognising your initial casual service, you should seek advice.

Do I get paid pro rata long service leave?

Long Service Leave remains as State based legislation and is not part of the Fair Work system. To check your eligibility, you should go to the Industrial Relations Board in your State. For example, NSW Industrial Relations has a calculator available here.

Photo credit: neetalparekh via / CC BY

What if I see my job advertised after I've been made redundant?

As per the definitions above, your job should have been abolished. It does happen that things change, be it Company management, structures, economic conditions etc, and over time your old job title may re-appear in the company, or perhaps a different job title but with much the same duties. There is no "rule" about how long a role needs to be abolished for in order for it to be considered redundant, even though many people may use 6 or 12 months as a general time frame.
If you see your job advertised and it was within 21 days you can make an unfair dismissal claim (provided you meet the service and income threshold requirements) by claiming your role was not made redundant, and therefore you were dismissed in an unfair, unjust or harsh manner.
If more than 21 days have passed, you have very limited options and this is why it is so important to seek advice immediately if you dismissed for any reason where you feel it was not justified.

Assuming the Company was good, and you enjoyed the job, you could always apply for the newly advertised role. Just be aware of any "pay back" provisions for your redundancy pay that the Company may have (this is particularly the case in the Public Service ) where you have received a redundancy payment and are then rehired.


Information provided here is general in nature and based on the Fair Work System. Not all workers in Australia are covered by the Fair Work Act, for example, State Government employees. If you are unsure, you can check the Fair Work website here.

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