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What are my rights when it comes to redundancy? - Seek

By Alan J. McDonald

What are my rights when it comes to redundancy? - Seek

Being made redundant can be overwhelming if you don’t know where you stand legally. We asked a lawyer to explain the rights and entitlements employees have when it comes to redundancy, and to clear up some of the key questions around this situation.

What are reasons for redundancy?

There are a few reasons your position may become redundant. Your employer may decide your role is no longer required in the organisation or the business may become insolvent or bankrupt, says Alexandra Targett, Lawyer at McDonald Murholme.

“Businesses may also need to make a position redundant if they are suffering from low sales or are undergoing a restructure, forcing them to cut down on jobs,” she says.

Redundancies aren’t considered genuine from a legal perspective if an employer could have, in reasonable circumstances, provided the employee with alternative suitable employment within their business or an associated entity.

In this situation you may be able to bring an unfair dismissal claim against the organisation.

Do I get a say in my position being made redundant?

While there’s no legislative requirement for employers to consult with an employee about a redundancy before the decision is made, Targett says your employment contract may contain an obligation on your employer to consult about a major change in the workplace, such as a redundancy.

“That’s why it’s important to review these documents – you may be able to argue the redundancy was not genuine, particularly if your employer has failed to comply with their obligations” she says.

What legal options do I have for challenging a redundancy?

If you‘ve been made redundant, you may be eligible to bring an application to the Fair Work Commission under unfair dismissal or general protections laws.

There are key differences between these two types of applications, so you should seek independent legal advice to determine which claim better suits your situation. An unfair dismissal claim may be more appropriate if your redundancy is not genuine, but a general protections claim may be more appropriate if you were selected for redundancy for an unlawful reason (such as discrimination).

You have only 21 days from the date your dismissal takes effect to file an unfair dismissal or general protections application with the Fair Work Commission, so it’s wise to seek professional advice as soon as you can, so that you can make an informed decision.

How much notice do employers have to provide?

Employers must provide the minimum notice period outlined in the National Employment Standard and this will depend on how long you’ve been with the company.

“If you’ve been working for your employer for one year or less, you are entitled to a minimum of one week’s notice,” Targett says. “The most you could attain under the National Employment Standards is four weeks’ notice if you’ve been employed with them for more than five years. The exception is those over 45 years of age who have completed as least two years of employment – this entitles you to an additional week of notice.”

How much of a payout am I entitled to?

To be entitled to a redundancy payout under the National Employment Standards, Targett says you must have been working with your employer on an ongoing basis for at least 12 months.

The amount payable is calculated at your base rate for ordinary hours worked, which Targett says generally excludes any loadings, overtime rates, monetary allowances or other separately identifiable amounts. The total amount is based on your length of continuous service with the employer.

“For example, if you have been employed for at least one year, but less than two, then the minimum redundancy pay is four weeks’ salary. Employees with a length of service of at least nine years but less than 10 are entitled to a minimum of 16 weeks’ redundancy pay,” she says.

However, Targett says small businesses – those that employ fewer than 15 people – may not be obligated to make a redundancy payment. This will depend on the industry in which the organisation operates, and any modern award or enterprise agreement governing its operations.  Likewise, casuals, independent contractors, trainees and apprentices are generally not entitled to receive a redundancy payment.

If you’ve been made redundant and you’re not sure about your specific entitlements, check out Fairwork’s handy calculator.

Reference: ‘What are my rights when it comes to redundancy?‘, Seek, November 2019.