Navigating Redundancy in 2025: Legal Essentials for Australian Employers

As of February, Australia's annual retrenchment rate stood steady at 1.7%, translating to approximately 233,800 workers being made redundant over the year. This figure underlines a climate of unease in the employment landscape, with 68% of employees voicing concern about potential redundancies. Sectors already impacted vary, and more industries are expressing anxiety about their future. Against this backdrop, ensuring redundancy processes are fair, transparent, and compliant with legal standards is more vital than ever.

Workplace change is never easy, especially when it involves roles being made redundant. With ongoing economic pressure and shifts in operational strategy, Australian employers face the dual challenge of navigating legal obligations while treating their people with dignity and care. Understanding how to manage redundancies thoughtfully has become a core competency for leaders and HR professionals.

Navigating redundancy in today’s environment requires a careful balance of empathy and legal precision. It’s not just a question of following procedure—it’s about leading through uncertainty with integrity. How organisations address redundancy speaks volumes about their values and commitment to their workforce, both those leaving and those remaining.

On a recent Through the HR Lens Market Update, Leanne Lazarus, Specialist Recruitment Manager at people2people, draws on expert insights from Jonathan Mamaril, Director and Head of Employment Law at South Geldard Lawyers, to explore the essential legal obligations and common pitfalls in managing redundancies. From understanding what qualifies as a genuine redundancy to executing fair consultation and communication strategies, the guidance is designed to help employers uphold both compliance and care.

"Is it a genuine redundancy?"

Jonathan Mamaril clarifies a crucial point: "A redundancy requires a position to be no longer required to be worked by anyone. It's not about the employee's performance, behaviour, or conduct."

He stresses the necessity for employers to build a clear business case to justify redundancies. "What I like to see from my clients is what the future looks like. What's going to be the new corporate structure? What are the operational and financial reasons for the decision?" Jonathan explains. Documentation such as board meeting minutes, HR communications, and executive discussions should be retained to support this case.

Leanne highlights a common misconception among businesses regarding process differences based on company size or industry sector. Jonathan clarifies that while redundancy pay exemptions exist for small businesses, the core procedural requirements remain largely consistent, especially concerning consultation processes laid out in awards or enterprise agreements. Industry-specific practicalities may alter the approach slightly, particularly regarding employee communication logistics.

One significant challenge is the adequacy and authenticity of the consultation process. Employers are legally obligated to conduct a genuine consultation with affected employees, even if the redundancy decision appears final. "The employee might come up with some good ideas. There might be ways to rectify the situation," Jonathan says, encouraging open dialogue.

Avoiding legal missteps during layoffs is essential, particularly in crisis situations. Jonathan notes, "The most common error is not ensuring the redundancy is genuine. Employers must also consider redeployment opportunities and be prepared with proper redundancy letters and documentation."

He also emphasises the importance of aligning payroll teams with the expected financial obligations, including notice periods, redundancy pay, and accrued leave. Equally critical is managing the aftermath: explaining decisions to staff, handling internal and external communications, and settling logistical matters like company property and final payments.

"Many employers focus solely on initiating the redundancy, but the post-meeting phase is just as important," Jonathan observes. Planning for questions around reputation, remaining entitlements, and handover procedures ensures a more dignified and structured exit for employees.

Making redundancies fair and legal

According to Fair Work Australia, a redundancy is genuine when an employer no longer needs a person's job done by anyone and has followed relevant consultation requirements. Here are practical steps employers should follow:

1. Determine if it's a genuine redundancy: Confirm that the role is being eliminated for valid business reasons, not performance-related issues.
   
   
2. Explore redeployment options: Investigate whether the employee can be moved to another role within the business.
   
   
3. Consult properly: If employees are covered by an award or enterprise agreement, engage in meaningful discussions before final decisions are made.
   
   
4. Provide correct entitlements: Ensure payment of redundancy pay, notice, and any accrued leave entitlements.
   
   
5. Respect additional contractual terms: Check for extended notice periods or other provisions in the employment contract.
6. Communicate clearly and empathetically: Prepare talking points for announcements and follow-up queries.
   
   
7. Handle logistics: Plan for return of company property, final pay, and handover procedures.
   
   

By maintaining a legally sound and respectful process, employers not only protect themselves from litigation but also uphold a supportive and humane workplace culture in challenging times. In a market as volatile as Australia's current environment, getting this right is not just a legal necessity but a moral imperative.