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Redundancy Entitlements

What is Redundancy?

The traditional definition of redundancy is that the employer no longer wishes the duties the employee has been performing to be undertaken by anyone.

Termination on this ground has therefore nothing to do with poor performance or misconduct.

A redundancy can occur as a result of a re-structure in order to increase the competitiveness or profitability of the business. It can also occur where an employee’s duties with respect to the position are divided up and redistributed amongst existing employees.

Notice and Severance are to be Distinguished

Notice and severance payments are not to be confused. The period of notice provides the employee with a chance to seek other employment while a severance payment is intended as compensation for the loss of future entitlements to long service leave and accrued sick leave.

No Implied Right to Receive a Severance Payment

The courts in Australia will imply a term of reasonable notice into a contract of employment where there is no explicit term otherwise dealing with the issue. This, however, is not the case with severance. In other words, the courts will not imply a term of severance into a contract of employment.

This means that, as an executive, you will usually have a limited basis for mounting any claim to a severance payment. If it exists at all, it will usually be found to be on the following basis…

 more on Claims for Severance Payments

Wrongful Termination Dressed up as a Redundancy

It is not uncommon for an employer to seek to portray the wrongful termination of an executive as a “redundancy”.

However the employer may seek to characterise the process, the fact remains that the contract is being brought to an end at the initiative of the employer.

It may be that, on examination of the facts, while you have no legal claim to a severance payment, you have the basis of a common law claim.

Watch to see if your Employer Starts Advertising your Position

If you have concerns that your employer may be actively seeking to replace you, it would be prudent to keep an eye on online and print advertisements to see if you can identify your position.

Address the Issues Relating to Redundancy Entitlements at the Time of your Appointment

You should make no assumptions about whether, upon being made redundant, you will receive any severance payment. Ideally, you should attempt to address this issue of redundancy entitlements at the time of your initial appointment.

Take Urgent Legal Advice if you are about to be made Redundant

If you have no contractual right to severance upon being made redundant, it becomes even more important to ensure that you do nothing to jeopardise a possible common law reasonable notice claim. In this regard, you should take urgent legal advice if it seems likely that your contract of employment is about to be terminated for reasons of redundancy.

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+61 3 9653 9123

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