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Employment Relations: Employment agreement builder

Section 12: Redundancy

Redundancy occurs when the amount or nature of work changes and some employees become surplus, or "redundant". The following section deals exclusively with redundancy: definition, process, notice, compensation and technical redundancy.

There is no legal requirement to include general redundancy clauses in employment agreements, although including such clauses can give certainty to employers and employees when the changing amount or nature of work in an enterprise makes some or all of its employees surplus to requirements.

Definition of Redundancy
 
Redundancy is a situation where the position of employment of an employee is or will become surplus to the requirements of the employer’s business.


Redundancy Process
 
In the event the Employer considers that the employee’s position of employment could be affected by redundancy or could be made redundant, the Employer shall, except in exceptional circumstances, consult with the Employee regarding the possibility of redundancy and, before a decision to proceed with redundancy is made, whether there are any alternatives to dismissal (such as redeployment to another role). In the course of this consultation the Employer shall provide to the Employee sufficient information to enable understanding and meaningful consultation, and shall consider the views of the Employee with an open mind before making a decision as to whether to make the employee’s position of employment redundant. Nothing in this clause limits the legal rights and obligations of the parties.


Notice of Termination due to redundancy
 
In the event the employee’s employment is to be terminated by reason of redundancy, the Employee shall be provided with notice in writing. This notice is in substitution for and not in addition to the notice set out in the general termination clause.


Compensation - Fixed Amount
 
In the event the employee’s employment is terminated on the basis of redundancy, the Employee shall be entitled to redundancy compensation in the sum of .
Compensation - Formula based on years of service
 
In the event the employee’s employment is terminated on the basis of redundancy, the Employee shall be entitled to redundancy compensation on the basis of the following formula: .
No Redundancy Compensation Payable
 
In the event the employee’s employment is terminated on the basis of redundancy, the Employee shall be entitled to notice of termination of employment as specified in the termination clause, but shall not be entitled to any additional payment, whether by way of redundancy compensation or otherwise.
I do not require this clause in my agreement.


Technical Redundancy
 
Where the employee’s position of employment is redundant by reason of the sale or outsourcing or merger or transfer of any part of the employer’s business or operations, the Employee shall not be entitled to redundancy compensation if they are offered similar employment by the purchaser, transferee or merged entity, on terms of employment which are no less favourable than the employee’s terms of employment at the time of the sale or outsourcing.
About OER | Department of Labour, May 2006. © The Crown