Redundancy 101

Business owners of all shapes and sizes will know that operating a business comes with a few risks.

One of those risks can include what to do when a business is faced with some hard choices around its operations and the potential need for making people redundant….made harder when it’s having to be done at a time of year that might see a holiday about to happen.

To help you address this issue, we’ve brought together some simple steps to assist a business when employees are likely to be affected by redundancy – plus an absolutely critical final thought at the end of the article.

*** Note for STATE system employers, the following principles remain the same but seek advice for your circumstances.

What is a redundancy?

First things first, redundancy applies to a role and not a person.

[insert sound of record skipping]

If you’ve just had to double check your knowledge on this first point, chances are you might actually need some performance management for the role/person. This can be an easier proposition and, handled timely, be a better way to minimise risks associated with unfair dismissal and adverse actions for a smaller business.

Otherwise, to be a ‘genuine redundancy’, an employer must demonstrate:

  • the person’s job doesn’t need to be done by anyone
  • the employer followed any consultation requirements

It’s here that employers also need to be mindful as the onus of proving these two points is with the employer (unlike unfair dismissal which is with the employee).

Who doesn’t get redundancy?

As we always do at RAW HR, here is a link to a very comprehensive answer straight from Fair Work. Some of the groups not covered might just surprise you!

Suffice to say we encourage employers to always check a redundancy as industries and small businesses can be different depending on the situation.

Proving a genuine redundancy.

Generally speaking, employers should have some very clear operational reasons for the redundancy and this is where talking to your accountant or HR business advisor will help – as one of the clearest ways to show this can be through financial data.

From this position, why you have to make a role redundant will hopefully start to become much clearer.

Once you’re satisfied of the operational reasons for a redundancy, you can move towards consulting with employees….often the weak link in a business’s action plan.

Tip: a position can still be made redundant if the work continues to be performed but the employer is now distributing the work differently (e.g. utilising technology, shifting amongst other employees or outsourced). Demonstrating operational reasons remains key to supporting this decision.


If you don’t know what award may apply to your workplace, now’s a great time to confirm this as awards will provide a ‘Consultation Clause’ that tells employers how they have to approach a significant change to the employment arrangement.

As a general rule, consultation requirements include:

  • notifying the employees who may be affected by the proposed changes
  • providing the employees with information about these changes and their expected effects (in writing)
  • discussing steps taken to avoid and minimise negative effects on the employees
  • considering employees ideas or suggestions about the changes

Prior planning helps.

If you’ve gone through ensuring a redundancy is genuine, here are some final checklist points to consider as you plan the significant changes for your business:

  • Confirm if you are a small business as redundancy provisions can be different (if applicable at all)
  • Always cross check your award – they sometimes provide different redundancy provisions (e.g. the Building and Construction General onsite Award 2010 includes small businesses)
  • Confirm if there are reasonable opportunities to redeploy affected employees within the business (or another ‘associated entity’)
  • Keep records of meetings and how decisions were reached (both on why a role was made redundant and why certain employees were chosen over others)
  • Consider if voluntary redundancies are an option
  • Confirm the payment of notice periods and how much is applicable

One last critical thing…

… the other humans in your business.

It is sometimes easy in all the stress of making a role redundant to forget that the employees ‘left behind’ might have some concerns and questions.

Simply assuming they will be happy because they still have a job can actually lead to them being less engaged, anxious (even upset at losing colleagues) or resigning if they think they might be next.

Proactively discuss with them what is happening and help restore some of the ‘brand image’ they have of the organisation and the way in which you treat your people.

Want more information?

The Fair Work Ombudsman has some really helpful starting information for National System employers, especially if you or a fellow business owner think a redundancy might be in the foreseeable future.

Or if you would like to talk discreetly with a RAW HR consultant instead, take advantage of a free phone consultation by contacting us below.

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