Letter of Termination for Redundancy

What is a Letter of Termination for Redundancy?

This Letter of Termination is designed to be used by an employer to terminate an employee for redundancy.

Redundancy occurs when the employee's job no longer needs to be done by anyone. Redundancy does not occur if an employee is replaced by a new employee. Likewise, if the employee is being terminated for their conduct or job performance, then this is not redundancy.

If the employer is terminating the employee for another reason, such as poor performance, use a Letter of Termination of Employment.

What is the difference between a Letter of Termination for Redundancy and a General Termination Letter?

A Letter of Termination for Redundancy is only for use if the employee is genuinely being made redundant. It is not for use in any other circumstances. For example, if an employee has a job as a payroll officer, but the employer implements some new payroll software, then the employer may no longer need the employee, so it may be a genuine redundancy.

On the other hand, a Letter of Termination of Employment is for use when the employee is being terminated due to their conduct or underperformance. For example, if the employee is regularly missing shifts at work, or abusing coworkers, then a Letter of Termination of Employment may be used.

Is it mandatory to have a Letter of Termination for Redundancy?

Employers must give an employee written notice of the day of termination when ending the employee's employment. This letter provides a useful and straightforward structure to help employers comply with this obligation.

What is redundancy?

Redundancy occurs when the employee's job no longer needs to be done by anyone. The job, rather than the employee, becomes redundant. Redundancy does not occur as a result of the employee's conduct or job performance.

For example, the following situations could lead to an employee being made redundant:

• an employee has a job as a payroll officer, but the employer implements some new payroll software, and the employer no longer needs the employee.
• an employee is a salesperson in a particular territory, but a change in regulations means the employer is forced to stop selling in that territory.
• a company is bought by a competitor, resulting in the marketing teams being merged. The employee was previously employed in the marketing team but is no longer needed.

If redundancy occurs, then the employee may be entitled to a lump sum payment of redundancy pay. Redundancy pay is calculated based on the employee's continuous period of service with the employer, and is calculated at their base rate of pay for ordinary hours worked. The longer the employee has been employed, the more weeks of pay they may be entitled to. The Fair Work Ombudsman provides further information, including a table which outlines how this is calculated.

The employee may also be entitled to a period of notice (or payment in lieu of that notice). The period of notice also varies, based on how long the employee has been employed as well as the employee's age. The Fair Work Ombudsman provides further information about how to calculate this as well.

What are the prerequisites of a Termination for Redundancy?

Even before preparing the letter, if changes are happening in the employer's business, causing the employer to consider redundancies, then the employer should make sure to communicate regularly with employees. In many cases, a modern award or enterprise agreement may require the employer to consult with the employee regarding changes in the business. Early in the process, the employer should make sure that it understands its rights and obligations regarding redundancy. In particular, the employer will need to know whether redundancy will apply, and if so, the terms of that redundancy (such as processes to follow, amounts of redundancy pay and any minimum notice periods).

Minimum standards for employment are set in the National Employment Standards. However, if there is an applicable industrial instrument (such as an award or a registered agreement), then this may set additional requirements. In addition, a contract of employment or a workplace policy might also set additional requirements. In any case, the employer will need to comply with whatever requirements are most favourable to the employee. The National Employment Standards are only the minimum standards. For small businesses, it is also important to check the Small Business Fair Dismissal Code. Further information about these matters may be obtained from the website of the Fair Work Ombudsman. If the employer is still unsure about these obligations, then the employer may need to seek legal advice.

What has to be done once the Letter is ready?

Once the Letter of Termination of Employment is ready, the employer may sign and date it. The employer may then organise a meeting with the employee, and at that meeting, provide a copy of this letter to the employee. The employer should also keep a copy for their own records.

If the employee is entitled to redundancy pay or other assistance as part of the redundancy process, then the employer will also need to comply with those obligations.

How can the employer work out if they owe redundancy pay or other obligations to the employee?

This depends on a range of factors including the terms of the employee's contract, and the size of the employer's business. But there are a number of ways to find information about this:

• Firstly - the employer can check the employee's conditions of employment. Minimum standards for employment are set in the National Employment Standards. However, if there is an applicable industrial instrument (such as an award or a registered agreement), then this may set additional requirements. In addition, a contract of employment or a workplace policy might also set additional requirements. In any case, the employer will need to comply with whatever requirements are most favourable to the employee. The National Employment Standards are only the minimum standards. For small businesses, it is also important to check the Small Business Fair Dismissal Code.
• Secondly - the employer can check with the Fair Work Ombudsman which provides a lot of guidance and fact sheets.
• Thirdly - if the employer is still not sure, then they may need to seek legal advice.

What must a Letter of Termination for Redundancy contain?

In order to prepare this letter, the employer will need to provide information about:

• the full names of the employer and the employee,
• the reason for the redundancy,
• the last day of work for the employee,
• any redundancy pay that the employee may receive, and
• any other entitlements that the employee may receive.

Which laws are applicable to a Letter of Termination for Redundancy?

The Fair Work Act 2009 (Cth) and the National Employment Standards apply to most employment situations in Australia.

However, in addition, many employment situations are also governed by modern awards or enterprise agreements. If such an award or agreement applies, then that will set out some additional minimum standards with which the employer must comply.

In addition, general principles of contract law, as provided by the common law, will apply to any employment contract.

How to modify the template?

You fill out a form. The document is created before your eyes as you respond to the questions.

At the end, you receive it in Word and PDF formats. You can modify it and reuse it.