The difference between terminating employment and making an employee redundant

It is important that you understand the difference between terminating an employee and making their role redundant, as this  can have significant consequences.

Redundancy occurs when an employer no longer require the employee’s job to be filled by anyone because of changes in the operational requirements of the business. Changes in the operational requirements may include:

• A machine is now available which can do the task previously performed by the employee,
• There is a downturn in your business environment and so less staff are needed to perform the same task,
• You are restricting your business to improve efficiency and so you distribute the tasks among other workers.

It is not enough to just say that the position is no longer required, you must point to financial or efficiency reasons for the change.

If you are bound by a modern award or enterprise agreement, you may need to consult with the employee about the redundancy.

Termination occurs when you end the employment of the employee but do not satisfy the above definition of redundancy. Termination must occur in a fair manner that may give the employee warnings about performance or the reasons for termination and an opportunity to respond.

If you have further questions, please contact us at frank@franklaw.com.au

This is not legal advice. 

Written by Tim Cargill & Zdenka Marinov and edited by Andrew Graham.