The Correct Redundancy Process in Australia 2025

Australia's unemployment rate has climbed to 4.3% in June 2025, up from historic lows of 3.5% in 2022. Behind that statistic are real businesses making tough decisions, and HR managers navigating one of the most complex areas of employment law. 

But 2025 is different from previous downturns. We're not just dealing with traditional economic pressures. According to the World Economic Forum's latest Future of Jobs Report, 41% of employers worldwide plan to reduce their workforce in the next five years due to AI automation. McKinsey's research shows that while 92% of companies are increasing AI investments, many are quietly "restructuring" roles – a euphemism that often masks AI-driven redundancies.

The stakes have never been higher for getting redundancy right. With new wage increases taking effect from July 2025 and evolving workplace laws, the Fair Work Commission has been crystal clear: genuine redundancies are protected from unfair dismissal claims, but only when you follow the rules to the letter. Miss a step, skip consultation, or fail to consider redeployment, and you could find yourself facing costly legal battles that make redundancy payments look like pocket change.

And it’s not just about compliance. Workplace change and job insecurity are among the leading causes of psychological distress, with 2 in 5 Australians experiencing poor mental health annually. How you handle redundancy affects those leaving, as well as the psychological safety and trust of your entire workforce.

Let's dive into exactly how to navigate these challenging waters with legal precision and human compassion. ⬇️

The New Reality: AI, Automation, and the Changing Face of Redundancy

Artificial intelligence is fundamentally changing why and how redundancies occur. A recent CNBC analysis revealed that while companies rarely explicitly cite AI as the reason for job cuts, employment experts suspect many "restructuring" and "optimisation" announcements mask AI-driven workforce reshaping.

IBM made headlines by openly stating that 200 HR employees were replaced with AI chatbots, while Klarna's CEO revealed their workforce shrank from 5,000 to 3,000 employees largely due to AI implementation. These are harbingers of a broader transformation affecting Australian workplaces. New opportunities will arise, so don't stress. One door shuts and another opens. Be kind to yourself and others. Also, you never know what the person sitting next to you is going through. 

The Hidden AI Factor in Australian Redundancies

McKinsey's 2025 AI workplace report shows that 14% of workers globally have already experienced job displacement due to automation or AI. In Australia, sectors like customer service, content creation, data processing, and basic analysis are seeing rapid AI adoption. The pattern is consistent: companies aren't saying "we're replacing you with AI," but they're saying "we're streamlining operations" or "optimising our structure."

For HR managers, this creates a new challenge. Traditional redundancy processes assume roles become unnecessary due to market conditions, restructuring, or business closure. But when AI can perform tasks previously requiring human workers, the legal question becomes: has the role genuinely been eliminated, or has it simply been transferred to a machine?

The Fair Work Commission hasn't yet provided specific guidance on AI-driven redundancies, but the principle remains: if the work still needs to be done (even by AI), and you haven't properly consulted or explored redeployment opportunities, you may not meet the genuine redundancy test.

Preparing for the Automation Wave

Forward-thinking HR managers should consider:

• Transparency about technological changes: While you don't need to announce every AI pilot project, being honest about significant technological shifts affecting roles builds trust
• Retraining and redeployment: When introducing AI, consider whether existing employees can be trained for higher-value tasks
• Consultation timing: Begin consulting about technological changes early, before final decisions are made about which roles become redundant
• Documentation: Clearly document the business rationale for technological adoption and why specific roles are no longer required

What is Genuine Redundancy Under Australian Law?

Before we get into the nitty-gritty of the process, you need to understand what makes a redundancy "genuine" under Australian law. The Fair Work Act requires three key criteria to be met: your business no longer requires the person's job to be performed by anyone due to operational changes, you've followed all consultation requirements in applicable awards or agreements, and it's not reasonable to redeploy the employee elsewhere in your organisation.

This is where many employers trip up. For instance, if you make someone redundant but then outsource their duties to a consulting firm, this likely won't meet the genuine redundancy test. The role itself must truly be eliminated, not just shuffled around.

💡 Want to understand the Fair Work Act better? Check out our comprehensive guide to the Australian Fair Work Act for everything you need to know about the foundation of Australian employment law.

What Actually Triggers a Redundancy?

Recent data from the Australian Bureau of Statistics shows job mobility rates declining across all states and territories in 2024, suggesting workers are holding onto roles longer in an uncertain economic climate. Against this backdrop, redundancies typically arise from legitimate business changes such as:

• Technological advancement – when automation or AI eliminates the need for certain roles (as discussed above)
• Business restructuring – consolidating departments or changing operational models
• Economic pressures – reduced demand requiring workforce reduction
• Location changes – office closures or relocations where redeployment isn't feasible
• Insolvency or bankruptcy – when the business can no longer operate

The key distinction is that redundancy affects the position, not the person. You cannot use redundancy as a mechanism to dismiss underperforming employees – that requires a different process entirely.

The Mental Health Dimension

Here's something that doesn't appear in most redundancy guides but should be front and centre of your planning: the psychological impact on your workforce. Beyond Blue's research shows that nearly half of Australians will experience poor mental health during their working lives, and workplace uncertainty is a significant trigger.

The concept of "survivor syndrome" is real – employees who remain after redundancies often experience guilt, increased anxiety, and reduced job security. A 2024 study on workplace mental health found that organisations investing in mental health support see returns of $2.30 for every dollar invested, making psychological support not just ethically important but financially sound. Nothing is missing it just changes form. Look at the other areas of life that are going ok, and what is the benefit of redundancy. 

The Power of Voluntary Redundancy Programs

Here's a strategy that's often overlooked but can transform your redundancy process: voluntary redundancy programs. While many HR managers focus solely on involuntary redundancies, voluntary programs offer significant advantages for both legal compliance and workplace morale.

Why Voluntary Redundancy Works

Recent analysis shows that voluntary redundancy programs can:

✔️ Reduce legal risk: When employees choose to leave, unfair dismissal claims become virtually impossible

✔️ Maintain team morale: Giving employees choice rather than imposing decisions preserves trust

✔️ Avoid difficult selection processes: You don't have to choose who stays and who goes

✔️ Retain key talent: Often, employees nearing retirement or considering career changes volunteer first

The Australian Context for Voluntary Programs

Under Australian law, voluntary redundancy still requires the same genuine redundancy criteria to be met. The difference is in implementation – you're inviting applications rather than selecting specific individuals.

Key considerations for voluntary programs:

1. Eligibility criteria: Define which roles are eligible based on business needs, not individual performance
2. Financial incentives: Many employers offer enhanced packages – perhaps an additional 2-4 weeks' pay on top of statutory entitlements
3. Selection rights: You're not obligated to accept every volunteer, but you must apply consistent criteria
4. Documentation: Keep clear records of who applies, selection rationale, and communications

Voluntary Redundancy Package Components

A typical voluntary redundancy package includes:

• Standard redundancy pay as per NES or award provisions
• Payment in lieu of notice
• Accrued leave entitlements
• Additional financial incentives (optional but common)
• Extended health insurance benefits (if offered)
• Outplacement or career transition support

Potential Pitfalls to Avoid with Voluntary Redundancy

The talent drain risk: Your best performers might volunteer, leaving capability gaps. Combat this by clearly defining eligible roles and maintaining the right to decline applications.

Discrimination concerns: Ensure your selection criteria are objective and don't indirectly discriminate against protected groups.

Expectation management: Be clear that expressions of interest don't guarantee acceptance, and explain your selection process transparently.

Who's Entitled to Redundancy Pay in 2025?

Not everyone who loses their job receives redundancy pay, and understanding the eligibility criteria is crucial for HR managers calculating potential costs and obligations. With the July 2025 wage increases, these calculations have real financial impact.

Core Eligibility Requirements

Under the National Employment Standards (NES), employees are entitled to redundancy pay if they've completed at least 12 months of continuous service with an employer who has 15 or more employees. However, there are several important exceptions:

Employees who don't receive redundancy pay:

• Casual employees (unless they work on a regular and systematic basis)
• Employees with less than 12 months of continuous service
• Those employed by small businesses (fewer than 15 employees) under standard NES provisions
• Fixed-term contract employees whose contracts end at the specified time
• Employees dismissed for serious misconduct
• Apprentices and trainees employed only for the duration of their training

The Small Business Exception – With Important Updates

Small businesses with fewer than 15 employees are generally exempt from paying redundancy under the NES. However, from 15 December 2023, there's a crucial exception: employers that become small businesses due to downsizing during bankruptcy or liquidation may still be required to pay redundancy to eligible employees.

This change reflects recognition that employees shouldn't be penalised when businesses fail after they've contributed years of service. For struggling businesses, this means redundancy costs should be factored into insolvency planning.

Industry-Specific Redundancy Schemes

Here's where it gets expensive for some employers. Certain industries have their own redundancy schemes that override the standard NES provisions.

Building and Construction Industry Under the Building and Construction General On-site Award 2020, redundancy is defined far more broadly as "an employee who ceases to be employed for reasons other than misconduct or refusal of duty." Key differences include:

• Payment starts from the first week of employment (not after 12 months)
• No small business exemption – even employers with fewer than 15 employees must pay
• Different payment scales (capped at 8 weeks after 4 years, compared to NES maximums)
• Covers a much broader range of employment endings

Other Industry Schemes Similar broad schemes apply in plumbing, fire sprinkler installation, and some mining operations. If you're in one of these industries, your obligations may be significantly different from the standard NES provisions.

Practical Implications for HR Planning

The financial impact can be substantial. Consider these scenarios:

Scenario 1: Tech Startup (12 employees)

👍 Standard outcome: No redundancy pay obligations under NES

⚠️ Exception: If the business becomes insolvent after redundancies, payments may still be required

Scenario 2: Construction Company (25 employees)

• Must follow building industry scheme
• Redundancy payments start from week one of employment
• No small business exemption even if workforce drops below 15

Scenario 3: Professional Services Firm (50 employees)

• Standard NES provisions apply
• Must pay redundancy for eligible employees with 12+ months service
• Consider voluntary redundancy to manage selection challenges

2025 Redundancy Pay Scales and Calculations

With the 3.5% wage increase taking effect from 1 July 2025, redundancy calculations will be based on these updated rates. ⬇️

Current Redundancy Pay Scale

Redundancy pay is calculated using an employee's base rate of pay (excluding overtime, penalties, allowances, or bonuses) multiplied by the applicable number of weeks based on their continuous service:

🔍 Stay updated on pay rates: Our detailed guide to managing Australian pay rates covers everything from minimum wages to penalty rates and how they affect your payroll calculations.

Practical Calculation Examples

Example 1: Standard Calculation Sarah works in marketing, earning $1,200 per week base pay with 6 years and 3 months of service.

• Service period: 6-7 years = 11 weeks redundancy pay
• Calculation: $1,200 × 11 weeks = $13,200 redundancy pay

Example 2: Industry-Specific Scheme James works in construction under the Building Award with 3 years service, earning $1,400 per week.

• Under industry scheme: Different calculation applies (check specific award provisions)
• Plus: No small business exemption even if employer has <15 employees

Example 3: Small Business Maria works for a café with 12 employees, 4 years service, $900 per week.

• Standard outcome: No redundancy pay (small business exemption)
• Exception: If business becomes insolvent after 15 December 2023, redundancy may still be payable

Additional Entitlements Beyond Redundancy Pay

Remember, redundancy pay is just one component. Employees are also entitled to notice of termination (or payment in lieu), accrued annual leave, and potentially long service leave. For employees over 45 with at least two years' service, an additional week's notice is generally required.

📚 Learn more about termination processes: Our guide on how to write a termination letter in Australia covers the legal requirements for different types of employment endings.

The Consultation Process: Your Legal Shield

This is where most redundancy processes either succeed or fail catastrophically. Consultation is a legal requirement that, when done properly, protects you from unfair dismissal claims.

Pre-Decision Consultation Requirements

Consultation must occur before you make a final decision to make positions redundant. This means you need to genuinely consider employee input and alternative suggestions, even if you ultimately proceed with redundancies.

Modern Award Obligations If your employees are covered by a modern award or enterprise agreement, you must follow their specific consultation requirements. These often include written notifications, multiple meetings, and specific timeframes.

Best Practice Consultation Process:

1. Initial Notification
   
   
   • Inform affected employees that their positions are "at risk"
   • Explain the business reasons driving potential redundancies
   • Clarify that no final decision has been made
2. Written Invitation to Formal Consultation
   
   
   • Provide at least 24 hours' notice for the formal meeting
   • Include details about support persons or representatives
   • Outline what will be discussed
3. Meaningful Discussion
   
   
   • Present the business case clearly
   • Listen to employee suggestions and concerns
   • Explore alternatives genuinely
   • Consider redeployment opportunities
4. Documentation
   
   
   • Keep detailed records of all consultations, including meeting notes and follow-up summaries sent to employees
   • Document how you considered employee input
   • Record your reasoning for final decisions

Large-Scale Redundancy Notifications

If you're considering redundancy of 15 or more staff, you must provide written notification to Centrelink (Services Australia) of the proposed dismissals as soon as possible and before employees are made redundant. Penalties may apply for non-compliance with these notice requirements.

Common Consultation Failures

The Fair Work Commission has seen numerous cases where employers thought they'd consulted adequately, only to find their redundancies weren't genuine:

❌ Cursory notification without genuine discussion

❌ Making final decisions before completing consultation

❌ Failing to consider employee suggestions seriously

❌ Not consulting employees on leave (parental leave, sick leave, etc.)

Redeployment: The Often-Overlooked Obligation

Before you can make someone redundant, you must consider whether they can be redeployed to another suitable role within your business or associated entities. This isn't optional – it's a legal requirement that forms part of the genuine redundancy test.

What Constitutes "Suitable" Alternative Employment?

A suitable role takes into account the employee's skills and experience, current hours and pay, and location. It doesn't need to be identical to their current role, but it should be reasonably comparable.

Factors to consider:

• Skills transferability and training requirements
• Salary and conditions (substantial similarity required)
• Location and travel implications
• Career progression implications
• Impact on employee's personal circumstances

The Redeployment Process

1. Role Identification
   
   
   • Review all current and upcoming vacancies
   • Consider roles in associated businesses
   • Think creatively about role modifications
2. Skills Assessment
   
   
   • Evaluate transferable skills
   • Identify training needs
   • Consider trial periods
3. Offer Process
   
   
   • Make formal written offers
   • Provide adequate detail about the new role
   • Allow reasonable time for consideration

If an employee unreasonably refuses a suitable redeployment offer, their redundancy pay may be reduced or eliminated. However, the offer must genuinely be suitable – you can't make an unrealistic offer just to avoid redundancy payments.

Step-by-Step Redundancy Process for 2025

Here's your practical roadmap for managing redundancies correctly:

Phase 1: Planning and Preparation

1. Business Case Development

• Document the business reasons necessitating redundancies
• Prepare financial analysis supporting the decision
• Create organisational charts showing role elimination
• Identify which positions will be affected

2. Legal Review

• Check applicable awards and enterprise agreements
• Review employment contracts for additional obligations
• Confirm consultation requirements
• Calculate potential redundancy costs

3. Selection Criteria (if applicable)

• Where multiple employees perform similar roles but not all positions are redundant, establish fair and objective selection criteria
• Avoid discriminatory factors
• Document the selection rationale

Phase 2: Initial Consultation

4. First Notification

• Meet with affected employees to explain their positions are "at risk"
• Provide clear business rationale
• Emphasise that no final decision has been made
• Offer support person attendance

5. Written Consultation Invitation

• Send formal meeting invitations
• Provide at least 24 hours' notice
• Include agenda and support person rights
• Schedule individual meetings

Phase 3: Formal Consultation

6. Consultation Meetings

• Present detailed business case
• Explore alternative solutions
• Discuss redeployment opportunities
• Consider employee suggestions genuinely
• Take detailed meeting notes

7. Redeployment Assessment

• Identify suitable alternative roles
• Assess skills and training requirements
• Make formal redeployment offers where appropriate
• Allow adequate consideration time

Phase 4: Decision and Implementation

8. Final Decision

• Consider all consultation feedback
• Document decision-making rationale
• Prepare termination letters and calculations
• Arrange final meetings

9. Formal Notification

• Meet with affected employees to confirm outcomes
• Provide written termination notice
• Explain entitlements and payment timing
• Offer support services

Phase 5: Support and Transition

10. Employee Support

• Provide information about government support services including the Early Access initiative for employment services
• Offer outplacement assistance where possible
• Arrange reference letters and employment statements
• Handle final pay and entitlements

11. Team Communication

• Communicate changes to remaining staff
• Address concerns and maintain morale
• Implement support measures for "survivors"

Templates for Redundancy in Australia

Proper documentation is your legal protection if redundancies are challenged. Here are the essential documents you need:

Core Document Templates

1. Business Case Documentation

CONFIDENTIAL - REDUNDANCY BUSINESS CASE

 

Date: [Date]

Prepared by: [Name, Title]

 

EXECUTIVE SUMMARY

[Brief overview of business challenges requiring redundancy]

 

BUSINESS RATIONALE

• Current business challenges: [specific details]
• Financial impact: [quantified where possible]
• Operational requirements: [changed needs]
• Future business direction: [strategic changes]

 

POSITIONS AFFECTED

• Role(s) to be made redundant: [specific titles]
• Reason position no longer required: [detailed explanation]
• Impact on business operations: [how work will be managed]

 

ALTERNATIVES CONSIDERED

• Cost reduction measures attempted: [list]
• Redeployment opportunities: [assessment]
• Role modification possibilities: [evaluation]

 

CONSULTATION PLAN

• Affected employees: [names, positions]
• Consultation timeline: [schedule]
• Award/agreement requirements: [specific obligations]

 

FINANCIAL IMPLICATIONS

• Redundancy payments: [calculations]
• Notice payments: [amounts]
• Other entitlements: [annual leave, etc.]
• Total cost: [summary]

 

Approved by: [Name, Title, Date]

2. Initial Consultation Letter Template

[Date]

 

Dear [Employee Name],

 

CONSULTATION REGARDING POTENTIAL REDUNDANCY

 

I am writing to inform you that [Company Name] is currently reviewing its operations due to [brief business reason]. As part of this review, we are considering whether your position of [Job Title] may need to be made redundant.

 

I want to emphasise that no final decision has been made. We are at the consultation stage and your input is important to us.

 

BUSINESS CONTEXT

[Explain the business challenges or changes requiring this review]

 

YOUR POSITION

Your role is being considered for redundancy because [specific reason why this position may no longer be required].

 

CONSULTATION PROCESS

We would like to meet with you to:

• Explain the situation in more detail
• Hear your thoughts and suggestions
• Explore possible alternatives
• Discuss potential redeployment opportunities

 

MEETING ARRANGEMENTS

I would like to arrange a meeting with you on [date] at [time] in [location]. You are welcome to have a support person or representative attend this meeting with you.

 

SUPPORT AVAILABLE

We understand this is concerning news. [Company Name] is committed to supporting you through this process. [Include details of any employee assistance programs or support services available]

 

Please contact me on [phone] or [email] if you have any immediate questions or concerns.

 

I look forward to speaking with you soon.

 

Yours sincerely,

 

[Name]

[Title]

[Contact details]

3. Formal Consultation Meeting Agenda

CONSULTATION MEETING AGENDA

Date: [Date]

Time: [Time]

Attendees: [Names and roles]

• Current business challenges
• Operational changes required
• Impact on workforce

• Specific reasons your role is affected
• Changes in operational requirements
• Future business structure

• Your questions and concerns
• Suggestions for alternatives
• Ideas for cost savings or efficiency

• Available positions within the business
• Skills transfer opportunities
• Training and development options

• Timeline for decision
• Further consultation requirements
• Support services available

6. Redeployment Offer Template

[Date]

Dear [Employee Name],

ALTERNATIVE EMPLOYMENT OFFER

Following our consultation regarding the potential redundancy of your current position, I am pleased to offer you alternative employment with [Company Name].

POSITION DETAILS

Position Title: [Title]

Department: [Department]

Location: [Address]

Reporting to: [Manager name and title]

TERMS AND CONDITIONS

Salary: $[amount] per annum

Hours: [full-time/part-time hours]

Start Date: [proposed date]

Employment Type: [permanent/fixed-term]

The full terms and conditions of employment will be [same as current position/as detailed in attached employment contract].

KEY RESPONSIBILITIES

[Outline main duties and responsibilities]

TRANSITION ARRANGEMENTS

If you accept this offer, we will provide:

• [Training/orientation period details]
• [Support during transition]
• [Trial period arrangements if applicable]

CONSIDERATION TIMEFRAME

Please advise me of your decision by [date - allow reasonable time]. If you have any questions about this role, please contact me on [phone] or [email].

If you choose not to accept this offer, we will proceed with the redundancy process and you will be entitled to redundancy pay in accordance with [relevant award/NES/agreement].

Yours sincerely,

[Name]

[Title]

5. Final Redundancy Letter Template

[Date]

Dear [Employee Name],

TERMINATION OF EMPLOYMENT - REDUNDANCY

I refer to our recent consultations regarding the potential redundancy of your position. After careful consideration of all feedback and alternatives discussed, I regret to inform you that [Company Name] has made the difficult decision to proceed with making your position redundant.

BUSINESS DECISION

This decision has been made because [specific business reasons - reference to business case].

TERMINATION DETAILS

Your employment will terminate on [date].

Your final day of work will be [date].

NOTICE PERIOD

You are entitled to [X] weeks' notice under [NES/award/agreement]. [You will work through this notice period/This will be paid in lieu of notice].

REDUNDANCY PAYMENT

You are entitled to redundancy pay of [X] weeks, calculated as follows:

• Continuous service: [X] years and [X] months
• Base rate of pay: $[amount] per week
• Redundancy entitlement: [X] weeks
• Total redundancy payment: $[amount]

OTHER ENTITLEMENTS

• Outstanding wages to [date]: $[amount]
• Accrued annual leave: [X] days = $[amount]
• [Long service leave: [X] days = $[amount]]
• [Other entitlements as applicable]

TOTAL PAYMENT: $[amount]

PAYMENT ARRANGEMENTS

Your final payment will be made on [date] via [method].

SUPPORT SERVICES

[Details of any outplacement services, counselling, or government support services available]

RETURN OF COMPANY PROPERTY

Please arrange to return [list items] by [date].

REFERENCES

We will be happy to provide a reference for your future employment. A statement of service is attached.

I want to thank you for your [time period] of service with [Company Name]. Your contributions to [specific achievements/areas] have been valued.

If you have any questions about this letter or your entitlements, please contact me on [phone] or [email].

Yours sincerely,

[Name]

[Title]

Attachments:

- Statement of Service

- [Other relevant documents]

Consultation Record Template

CONSULTATION MEETING RECORD

Date: [Date]

Time: [Start time] - [End time]

Location: [Location]

ATTENDEES

Employee: [Name, Position]

Management: [Name, Position]

Support Person: [Name, Relationship] (if applicable)

AGENDA ITEMS DISCUSSED

1. BUSINESS CONTEXT

[Record what was explained about business situation]

2. POSITION IMPACT

[Note explanation of why position is affected]

3. EMPLOYEE FEEDBACK

[Record employee questions, concerns, suggestions]

Key points raised by employee:

• [Point 1]
• [Point 2]
• [Point 3]

4. ALTERNATIVES DISCUSSED

[Note any alternatives explored]

5. REDEPLOYMENT OPPORTUNITIES

[Record discussion of alternative roles]

6. EMPLOYEE SUGGESTIONS

[List any solutions or alternatives proposed by employee]

ACTIONS ARISING

• [Action 1 - Who responsible, timeframe]
• [Action 2 - Who responsible, timeframe]

NEXT STEPS

• [Next meeting scheduled for...]
• [Information to be provided...]
• [Decisions to be made by...]

EMPLOYEE ACKNOWLEDGMENT

The employee [confirmed understanding/requested clarification on...] and was advised that [key next steps].

Meeting concluded at: [Time]

Prepared by: [Name, Title]

Date: [Date]

[Note: A copy of this record will be provided to the employee within 2 business days]

How to Support Employee Wellbeing Through Redundancy

The statistics on workplace mental health should give every HR manager pause: nearly 1 in 5 Australians experience poor mental health annually, and workplace uncertainty is a primary trigger. The Human Rights Commission reports that poor mental health costs the Australian economy between $12.2 and $22.5 billion annually.

The Psychological Reality of Redundancy

Redundancy is a mental health crisis waiting to happen if not handled properly. Research shows that job loss can trigger depression, anxiety, and a cascade of related health issues. But here's what many don't realise: the impact extends far beyond those made redundant.

Survivor syndrome affects remaining employees through:

• Increased anxiety about their own job security
• Guilt about keeping their jobs when colleagues didn't
• Additional workload stress as they absorb departed colleagues' duties
• Reduced trust in leadership and organisational stability

Legal Obligations for Mental Health Support

Under Australia's work health and safety laws, you have a duty to manage psychosocial risks in the workplace – and redundancy processes create significant psychosocial hazards. Safe Work Australia identifies job insecurity and organisational change as key risk factors for psychological injury.

Your legal obligations include:

• Identifying mental health risks in your redundancy process
• Implementing controls to minimise psychological harm
• Providing support for both departing and remaining employees
• Monitoring the ongoing impact on workplace mental health

Practical Mental Health Support Strategies

For departing employees:

✔️ Provide information about government support services, including the Early Access initiative for employment services before they become eligible for income support

✔️Offer Employee Assistance Program (EAP) access with extended coverage post-termination

✔️Consider financial counselling services to help manage the transition

✔️Provide career transition support, including CV assistance and interview preparation

✔️Maintain dignity throughout the process – avoid rushed meetings or impersonal communications

For remaining employees:

✔️Conduct workplace mental health risk assessments post-redundancy

✔️Increase management presence and support during the transition period

✔️Provide clear communication about future organisational direction

✔️Offer stress management resources and mental health support

✔️Consider workload adjustments during the transition period

Creating Psychological Safety

The manner in which you conduct redundancies sends a powerful message about your organisation's values. Employees who witness colleagues being treated with dignity and respect during redundancy are more likely to:

• Maintain trust in leadership
• Remain engaged and productive
• Speak positively about the organisation externally
• Support change initiatives

Conversely, poorly handled redundancies can create lasting psychological damage that affects recruitment, retention, and organisational culture for years.

Documentation and Mental Health

Keep records of:

• Mental health support provided to affected employees
• Risk assessments conducted during the redundancy process
• Training provided to managers on supporting staff mental health
• Resources made available to employees
• Follow-up conducted post-redundancy

This documentation protects you legally and demonstrates your commitment to employee wellbeing.

🧠 Building better HR policies: Learn how to create comprehensive HR policies that support employee wellbeing and mental health in our detailed guide.

Final Thoughts

The businesses that emerge stronger from redundancy situations are those that see beyond the immediate cost savings to the longer-term implications for culture, morale, and employer brand. They invest time in proper consultation, explore genuine alternatives, and support both departing and remaining employees through the transition.

Yes, the legal requirements can seem daunting. The consultation obligations, documentation requirements, and payment calculations all demand attention to detail. But think of these not as bureaucratic hurdles, but as a framework for doing the right thing by your people.

Getting redundancy right in 2025 means:

• Embracing transparency about technological changes and business challenges
• Investing in mental health support for both departing and remaining employees
• Considering voluntary programs that give employees choice and control
• Following rigorous legal processes that protect everyone involved
• Planning for the future workforce you need, not just eliminating roles you don't

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