Redundancy consultation explained: what you need to know

Redundancy. It’s right up there with tax audits and unexplained printer errors on the list of things business owners dread. No one enjoys making roles redundant, but sometimes it has to happen to keep the business afloat.

And when it does, there’s one step you cannot skip. The redundancy consultation.

This isn’t just some HR box to tick. It’s a legal requirement, a people-first process, and your best defence against ending up in a Fair Work mess. So let’s break it down in plain English, with a few laughs along the way.

What is a redundancy consultation?

A redundancy consultation is the process of speaking with employees before you finalise a redundancy decision. Not after. Before.

It means:

• Giving employees a heads-up that their role might go
• Letting them ask questions or suggest alternatives
• Showing that you’re open to ideas before making a final call

It’s not a performance review in disguise. It’s not a PR exercise. It’s an honest conversation about what’s happening and why.

When does redundancy happen?

Redundancy happens when a role is no longer required in the business. This could be due to:

• Restructuring to reduce costs
• A downturn in business activity
• A closure of a site or division
• New tech replacing manual tasks

It’s about the role, not the person. You cannot use redundancy to exit someone because you don’t like how they stack the dishwasher. This is a legal process, not a sneaky workaround.

What counts as a genuine redundancy?

To be a genuine redundancy under Australian employment law, you must:

1. Prove the job is no longer needed by anyone in the business
2. Follow the consultation obligations under any relevant award or agreement
3. Explore redeployment options across your business or associated entities

If you skip any of these steps, the redundancy could be challenged as an unfair dismissal. That’s when things get very expensive, very fast.

What happens during a redundancy consultation?

Here’s what the process should actually look like:

1. Give them notice

Let the employee know in writing that their role may be made redundant. Include:

• The reason why
• The role or roles affected
• Your planned timeline for consultation

Do not wait until five minutes before their shift ends on a Friday. That’s not consultation. That’s a blindsiding.

2. Hold a proper meeting

This is your chance to talk it out. Explain the situation. Let them ask questions. Listen to feedback. And actually consider it. Don’t nod along while thinking about your next meeting.

3. Explore all alternatives

You have to genuinely consider other options before confirming redundancy. This could include:

• Redeploying them into another role
• Offering reduced hours or job sharing
• Providing training to move them into a new position

Even if you’re 99 percent sure the role is going, the law requires that you make room for the 1 percent possibility.

4. Make a decision and confirm it

Once consultation is complete, and you’ve considered all options, you can move forward. Provide written notice that outlines:

• The reason for redundancy
• Their notice period
• Their entitlements, including redundancy pay if applicable

Do it respectfully, clearly, and with empathy. No one likes bad news, but how you deliver it matters.

Why consultation matters

Legal compliance

If you don’t follow the correct redundancy consultation process, you could face:

• Unfair dismissal claims
• Penalties under the Fair Work Act
• A massive headache and some very expensive lessons

Ethical leadership

Even when the decision is hard, your people deserve honesty and respect. Consultation gives them a voice and makes the process more human.

Brand reputation

Word travels fast. Whether you’re a team of 10 or 100, how you treat people on the way out will impact how the rest of the team feels, and what people say about you in the industry.

Employee rights during consultation

Employees are legally entitled to:

• Be consulted before a final decision is made
• Receive reasonable notice
• Get any redundancy pay they’re owed
• Challenge the process through Fair Work if it was not genuine or fair

Knowing this helps you manage expectations and stay on the right side of the law.

Common redundancy consultation mistakes

Let’s keep you out of trouble by avoiding these rookie errors:

• Skipping consultation completely: You must give people a chance to respond
• Treating it like a formality: If your mind is already made up, it’s not consultation
• Forgetting redeployment options: Even if they’re not perfect, they must be explored
• Failing to document everything: Verbal updates won’t cut it if a claim is made

Redundancy pay and entitlements

Here’s the quick version:

• Employees with 12 months of continuous service may be entitled to redundancy pay
• The amount depends on their years of service
• Small businesses (fewer than 15 staff) are often exempt, but check first

Still not sure what you owe? Head to the Fair Work Ombudsman website or call us and we’ll sort it out.

Supporting employees through the process

Redundancy is rough. You can’t take the sting out of it completely, but you can soften the landing with support like:

• Resume help or interview coaching
• Outplacement services to help them find new work
• Access to EAP or mental health support

Sometimes the smallest gesture makes the biggest difference.

How it plays out in small businesses

Small business owners often think they’re off the hook, but not so fast. You still need to:

• Follow the proper process
• Check your legal obligations
• Communicate clearly and respectfully

Yes, the rules are slightly different, but the principles of fairness, consultation and documentation still apply.

Final word

Redundancy consultation isn’t fun, but it’s part of being a responsible employer. Doing it properly protects your people and your business.

Consult early. Listen carefully. Communicate clearly. And if you’re feeling unsure, bring in someone who knows how to do it right.

Need help managing a redundancy consultation?

HR Gurus can walk you through it with no jargon, no drama, and no risk of winding up in legal hot water. Let’s keep it compliant and kind.