By Key Business Advisors
Human Resources

For many business owners right now, business can be tough. Aside from cashflow and customers, one of the reasons business owners are kept awake at night is staff. Do we have the right staff in our business? Are we making enough money? Is the business financially viable? Sometimes the answer to these questions, may lead us to face reality… Do we need to make some staff members redundant in order to keep the business afloat?


Redundancy is a part of everyday business. It happens and can often be hard to stomach. The fact is that most people may go through this process at some point in their working life. Many employers struggle with issues around redundancy and it is important to remember positions are made redundant, not people! Redundancy occurs when an employer no longer requires the job to be performed by anyone or becomes insolvent or bankrupt.


Is underperformance or mis-conduct the reason that I’m really making someone redundant?

Some employers find it difficult to deal with the emotion of confronting an employee who is underperforming and so, they decide to go down the redundancy path as it is less of a burden on them. However, the easy option could pose a significant financial risk should the right processes not be followed.

Employers can easily fall into the trap of using the wrong term ‘redundancy dismissal’ when their motive is to actually dismiss someone for poor performance or misconduct reasons. It is important to ensure that any dismissal is properly classified. ‘Dressing up’ a termination for underperformance or conduct may lead you into trouble.

What’s the right process?

We understand that having the hard conversations with staff can be an emotional and complex process. We want to take the ease out of these difficult conversations by informing our clients on the right steps to carry out a lawful and genuine redundancy process. Taking the necessary steps will not only protect your business against potential legal claims, such as breaches of the award, unfair dismissal or adverse action, but it will also give you peace of mind knowing you have followed the correct process.

Questions you need to ask yourself:

  • Is the redundancy legitimate? Or do I just want them out of my business?
  • Can I show proof of restructure requirements/downturn?
  • Have I followed the award/EBA requirements regarding workplace change?
  • What are the clauses in their contract/award or EBA on redundancy?
  • Have I given the right amount of notice? And do I need to pay them anything on top of this?
  • Do I have to pay out any entitlements?
  • How many roles are being made redundant?
  • Do I have any related entities the employee can be redeployed?

At Key Business Advisors, we understand the complexity that comes with redundancy and the struggle many business owners go through when making tough decisions. We are dedicated to providing the best possible solution for you and your staff and may even be able to offer alternative solutions to avoid the redundancy process all together! At KBA, we work with you to discover different measures an employer can put it place to mitigate the adverse effect of redundancy. As well as providing best practice HR advice for redundancy, we also offer Outplacement Services to help employees secure a new role.

Key Points to remember

  • If you don’t follow the employment obligations properly, businesses could be held liable by the Fair Work Commission
  • You are following the right award conditions such as consulting your employees about workplace changes
  • Consider re-deployment opportunities to mitigate redundancies

If you are a small business employer, with under 15 staff, severance pay may not be required. If you have 15 employees or over, you will most likely be required to make these payments.

For more support and advice on redundancy, contact one of our HR experts today so they can equip you with right tools and resources to mitigate any risks in your business. Call us – Key Business Advisors on 1300 4 ADVICE. For additional information please visit our website at www.keyba.com.au


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