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A worker is redundant when either a business is no longer able to trade for some substantive reason including bankruptcy and voluntary cessation or where the requirement for an employee to perform specific work has ceased or diminished. A redundant employee is entitled by law to receive a statutory payment as compensation for losing their job in an amount set out by law. Redundancy entitlement to payment may include statutory and contractual entitlements to notice, leave and redundancy pay and non-salary rights such as bonuses and share options. If you are unsure about your legal rights and require advice or representation about the relevant payment amount you should urgently contact a specialist redundancy solicitor.

Redundancy Pay Eligibility

The test for redundancy is whether an employer needs fewer workers (or no workers) to do work of a particular kind in a particular location and not just whether the volume of work has ceased or reduced. The National Employment Standards (NES) under the Fair Work Act 2009 and other more specific legislation entitles employees to a redundancy payment however certain classes of excess workers may not receive redundancy pay if the business has:

Deed of Release

In certain situations an employer, in a genuine redundancy situation, is prepared to pay the employee more than the statutory amount of redundancy pay however the employer usually wants something in return and these arrangements which are legally binding agreements are contained in a document, signed by both parties called a ‘Deed of Release.’ This type of arrangement if often beneficial to both parties however if you are offered a Deed of Release you should always take legal advice from a specialist redundancy solicitor before agreement is reached in order to preclude the possibility of an unfair agreement in the employers favour.

Sham Redundancy

In some cases an employer will manipulate a sham redundancy when in fact there is no actual redundancy however the employer, who wants to get rid of a particular employee, will maintain that the redundancy is genuine because a redundancy payment is often cheaper than the damages awarded in an unfair dismissal compensation claim before the courts. Employees may find that a short time after being made redundant, their old job is re-advertised and in these cases the employee is entitled to start legal action for unfair dismissal and should immediately take advice from a specialist redundancy solicitor.

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