Redundancy is, unfortunately, an increasingly common occurrence in the modern world. As positions are automated and jobs which previously relied on human labour taken over by machines, some positions are simply no longer needed. When this happens, the position can be made redundant, and the corresponding employee or employees may be dismissed.

However, you will have to pay said employees some sort of severance package if you make a position redundant. You should speak with experienced employment lawyers to ensure you’re following the correct procedures, but it’s also useful to have a good understanding of the financial implications of making a position redundant. In the rest of this article, we’ve provided a brief overview of these and more.

What Costs Will I Have to Absorb if I Make a Position Redundant?

If you decide to make a position redundant, you will have to absorb some costs, especially with respect to employee termination payments and entitlement payouts. The financial value of these varies with industry and position, but they include:

• A redundancy payout, which is generally based on the length of time an employee has been working with you.
• Any accrued entitlements, including annual and/or sick leave.

However, it’s also important to realise that redundancy payouts may be reduced under application to the Fair Work Commission if you:

• Can find another job for the employee or employees in question.
• Can’t afford to pay the full amount.

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