Redundancy is one of those topics that small business employers hope they never have to think about. It sits at the intersection of people, money, and law – three areas where actions are emotionally charged and mistakes can be expensive.
In Queensland, redundancy is governed primarily by federal workplace law, not state law. That means the Fair Work Act and relevant modern awards apply, even if the business is small, family-run, or has never made anyone redundant before.
Understanding the basics can save small business owners from unfair dismissal claims, reputational damage, and unnecessary stress.
What is a “genuine redundancy”?
A redundancy is generally considered genuine when:
- the employer no longer requires the job to be done by anyone, due to operational changes such as restructuring, downturn, automation, or closure;
- the employer has consulted with the affected employee (where required); and
- redeployment within the business or an associated entity is not reasonable.
If the work still exists and is simply being handed to someone else, renamed, or reshuffled without real change, the employer is not in redundancy territory – but rather, may be in unfair dismissal territory.
Are there small business exemptions for redundancy pay?
A small business employer is defined as having fewer than 15 employees, including regular casual employees (counted on a pro-rata basis). If this definition is met:
- Employers are generally not required to pay redundancy payments under the Fair Work Act.
- Employers are still required to provide notice of termination (or payment in lieu).
- Employers are still required to ensure the redundancy is genuine, not a disguise for performance or conduct issues.
Many small business owners trip up by assuming “small business” means “lighter obligations across the board” – it does not.
Modern Awards and Enterprise Agreements
Even if redundancy pay is not required under the Fair Work Act, a modern award or enterprise agreement may impose additional obligations, including:
- Consultation requirements,
- Notice periods,
- Redundancy or severance payments.
Awards apply to most employees in Australia, including in small businesses. Ignoring them can be a costly mistake.
If employers are unsure whether an award applies, Business Chamber Queensland can assist you.
Consultation is not a formality
Where consultation is required, it must be meaningful.
This usually involves:
- advising employees that a redundancy is being considered,
- explaining the reasons and potential impacts,
- genuinely considering feedback or alternatives raised.
Consultation does not mean the employee has veto power; however, it does mean the decision cannot be presented as “already made” before discussion occurs. Skipping this step, or rushing it, frequently undermines otherwise legitimate redundancy processes.
Redeployment options
Employers must consider whether the employee could reasonably be redeployed within:
- the business, or
- an associated entity.
“Reasonable” redeployment takes into account skills, qualifications, location, pay, and seniority. Employers are not required to create a role or demote someone into an unsuitable position but are expected to think beyond the narrow confines of the employee’s current job title. Failure to properly consider redeployment is one of the most common reasons redundancy decisions are challenged.
Notice period, final pay and documentation
Even where redundancy pay is not required, you must still:
- provide the correct notice (or payment in lieu),
- pay all accrued annual leave entitlements, and any other unpaid entitlements,
- issue separation certificates and final payslips correctly.
Clear, respectful written communication matters – poor documentation can turn a lawful process into a disputed one.
Practical support for employers
For small businesses, redundancy often feels personal – and it usually is. Many business owners are making decisions about people they know well, sometimes after years of working side by side. That emotional reality makes structure even more important in the redundancy process. A calm, well-documented, legally sound process protects both the business and the dignity of the employee. Handled well, redundancy can be a difficult but fair transition. Handled poorly, it can become a long-running dispute that drains time, money, and goodwill.
In a strange way, redundancy is less about ending a job and more about demonstrating how an employer behaves when things are hard. That behaviour tends to be remembered long after the role itself disappears.
Small business employers looking to tighten their processes or navigate complex scenarios can seek guidance from Business Chamber Queensland’s workplace relations specialists, who offer advice, training and tools to help businesses stay compliant.
