How to Make an Employee Redundant

This Redundancy Information Sheet provides a comprehensive information in relation to terminating an employee due to redundancy.

How to Make an Employee Redundant

What is redundancy?

Redundancy happens when an employer either doesn’t need an employee’s job to be done by anyone, or becomes insolvent or bankrupt. Retrenchment refers to the dismissal of an employee that occurs when the employee’s job is no longer required.

There can be several reasons for a redundancy, such as changes in the running of the business, process improvements or technological change or the need to reduce overhead expenses. But making an employee’s role redundant involves certain steps that need to be followed by the employer.

How to conduct the employee redundancy process

First, you should start with understanding your business needs and ensure that any proposed redundancy is based on genuine business needs.

An employer is required to consult with all workers about the potential redundancy prior to a final decision. This is where you have to inform employees that there role is at risk of becoming redundant, obtain their opinion around any ways to mitigate the situation and also discuss if there are any alternatives available for the employee.

Once you have chosen the roles to be made redundant and selected the employees to be retrenched, it is important to meet with them again, provide the final decision and give them notification in line with their employment contract, award or enterprise agreement. Consider also if you have any other policy outlining additional notice requirements and /or payments.

Steps to follow

• Consult with all affected workers
• Consider the employee’s point of views and any alternatives they present
• Meet to discuss final decision
• Consider suitable alternative employment
• Confirm the decision in writing
• Adhere to the notice requirements and redundancy payments as per the relevant Award, enterprise agreement, employment contract, workplace policy or the National Employment Standards.

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