Running a business is challenging, and managing your workforce to ensure it is the right size for your business needs is rarely easy or predictable. For many Australian businesses, workforce planning and redundancy decisions arise unexpectedly rather than as part of long-term planning.

The closure of a major client, the completion of a significant project, or an unexpected slowdown in market demand can all affect business profitability. These events often prompt a business review to assess whether the current workforce structure remains sustainable and compliant with Australian employment law.

Business reviews may be triggered by discussions with an accountant about cost reductions, during budget planning, or as part of end-of-year or beginning-of-year processes. In many cases, these reviews raise the question of whether a role redundancy may be necessary to protect the ongoing viability of the business.

Why redundancy discussions are rarely planned

Most businesses do not have a fixed schedule for conducting workforce reviews. Instead, redundancy planning is commonly reactive, triggered by financial, operational, or market changes rather than proactive workforce planning.

Unfortunately, a reactive approach can increase the likelihood of employee claims or disputes, particularly where affected employees question the timing or motivation behind the decision. This is why careful documentation and clear communication are essential throughout the redundancy process.

Is there ever a right time to have a redundancy discussion?

There is never a perfect time to conduct a business review that results in redundancies or has the potential to lead to redundancies. Employers frequently ask whether redundancy discussions should be delayed if an employee has commenced sick leave, is involved in a workplace investigation, or is undergoing a performance review.

In practice, nothing an employer does can entirely eliminate the risk of an unfair dismissal or general protections claim, regardless of whether such a claim is justified. Business operations are rarely linear, and multiple employment-related issues often occur at the same time.

The importance of a documented business review

The key to managing redundancy discussions lawfully and effectively is to clearly identify and document the purpose of the business review, its timing, and its intended outcome. Employers should also document why the review is being undertaken at that particular point in time.

This documentation should be shared with the workforce to ensure transparency and consistency. Treating all employees the same throughout the redundancy consultation process is critical to reducing legal risk.

How long should a pre-redundancy business review take?

Yes, a business review can be completed in a week.
No, a pre-redundancy business review does not need to take months.
No, a business review that may result in redundancy does not need to be delayed due to the personal circumstances of an employee currently occupying the role, subject to employer obligations under Australian employment law.

The scope and timeframe of the business review should reflect its purpose and provide sufficient time to assess how the business structure can be adjusted to meet operational needs.

Focusing on roles rather than people

When reviewing workforce requirements, the focus should be on roles, tasks, and business functions rather than the individuals currently performing them. Employers should consider what work is essential to continued business operations and whether the current structure is the most efficient way to deliver that work.

For example, where forward work is limited in a particular area of the business, certain roles may no longer be required. Where employees cannot be redeployed or cross-trained, those roles may become genuine redundancy candidates.

Redundancy process overview

To reduce risk and ensure compliance with Australian employment law, a structured redundancy process should be followed:

• Identify the need for a business review and clearly define its purpose
• Document the rationale for the review
• Set clear and reasonable timeframes
• Notify the workforce in writing of the review and its purpose
• Consult with employees both in writing and in person
• Decide on required structural changes, including roles to become redundant
• Identify potential redeployment opportunities
• Meet with affected employees to confirm redundancy, timing, and redeployment options
• Process redundancies in accordance with employment contracts and legal obligations

The redundancy process begins by giving employees notice of the business review and its timing. During the review, employers should assess roles based on actual functions and responsibilities rather than position descriptions alone.

Consultation, redeployment, and practical considerations

Once potentially affected roles are identified, individual consultation with employees in those roles must occur. Employees may provide suggestions to avoid redundancy, although not all suggestions will be commercially viable.

Employers must consider whether the functions of a redundant role will continue to be required and, if so, how those functions will be carried out. Redeployment should also be considered where suitable vacant roles exist.

Redeployment does not require the creation of a new role. It involves offering an employee an existing vacant role for which they have appropriate skills and experience. In small businesses, redeployment opportunities may be limited or unavailable.

Common scenarios that concern employers

Redundancy discussions do not automatically need to be delayed where an employee is:

• undergoing a performance review
• suspended or under investigation
• on sick leave
• on maternity or parental leave
• covered by discrimination legislation
• involved in a workplace complaint
• recently redeployed
• on extended leave
• requesting a change in employment status

In each case, employers must be able to demonstrate that the redundancy decision achieves the documented purpose of the business review. Consistent treatment of employees is essential to reducing discrimination and unfair dismissal risk.

Need advice on redundancy and workforce planning?

If you need guidance on workforce planning, redundancy consultation, or managing disputes arising from a redundancy process, booking early employment law advice can significantly reduce risk.

Subject to employer obligations under WorkCover legislation.

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