Redundancy payments should be made according to the appropriate award.

Avoiding unfair dismissal claims during redundancies

Redundancy payouts can be a large cost to a business that may already be struggling, but there are ways to ease this threat.

Employees will often try to resist change despite the fact it may be in the company’s best interest – and may even threaten to lodge an unfair dismissal claim if they feel they have been treated poorly during this process.

It is, therefore, important for businesses to make sure they take the appropriate measures to protect themselves from these claims.

To be eligible to make an unfair dismissal claim an employee needs to be able to prove they were with your organisation for a period of six or more months (12 months in the case of a small business), have earned less than $162,000 per annum (prior to July 2022)  or been award covered.

They will also have to lodge their claim within 21 days of their dismissal for it to be eligible to be considered by Fair Work Australia.

In some cases, you may be able to help your employees secure new roles or similar positions within another organisation. Having offered an employee another role where practicable can also disqualify the employee from taking an unfair dismissal against the business.

If this is possible, you may also find that you are not liable to pay a full redundancy payment.

Redundancy payments should be made according to the appropriate award and will include any unpaid sick leave, holidays or accrued leave. Award consultation provisions also need to be closely followed.

You also have a legal obligation to your former employees to clearly outline the terms of their employment agreement and how much money they are owed.

Consulting your staff about the possibility of a redundancy is important and failure to do so could result in an unfair dismissal claim.

Hiring another person to fill the same role after it was made redundant may also result in the same action being taken because it throws into doubt whether the redundancy was genuine.

Want to find out more about unfair dismissals? Take a look at our Ultimate Guide on Avoiding Unfair Dismissals now!

Free Download: Termination Letter Template

Need to let an employee go? Use our letter of termination template to ensure you are using the correct format. 

termination letter template