Forced Redundancy vs Voluntary Redundancy

Over time, it is natural for businesses to face a wide range of challenges and changes. This can mean positive outcomes for a company  but change may also lead to having to make some tough decisions, including potentially making employees redundant.

Which begs the question, what is the difference between forced redundancy and voluntary redundancy?

Redundancy happens when an employer either no longer needs an employee’s job to be done by anyone or the business becomes insolvent or bankrupt. 

A genuine redundancy can happen when:

• the employer does not require a job to be done at all, by anyone;
• The introduction of machinery and technology replaces the need for manual labour;
• the company/ business becomes insolvent or bankrupt
• a business relocates or closes down;
• roles are redistributed and reassigned, resulting in a reduction in the total number of positions. 

Redundancy is not genuine when:

• the position still exists, and instead, has been assigned to someone else;
• the employer has not adhered to the relevant requirements to consult with employees about the redundancy under an award or registered agreement; or
• The employee could reasonably have been redeployed to another job within the employer’s business. 

Voluntary Redundancy vs Forced Redundancy: What’s the Difference?

The difference between voluntary and forced redundancy is simple. Voluntary redundancy is where an employee accepts an offer to have their role made redundant by their employer. On the other hand, forced redundancy is where the employer selects which employees will be made redundant.  It is important to ensure that this decision is made for genuine operational reasons and not based on discriminatory factors.  Any payment an employee is entitled to receive when they are made redundant will be the same whether the redundancy is voluntary or involuntary.

Voluntary Redundancy

Voluntary redundancy is where an employee agrees to be made redundant having been given that option by their employer. It offers employees and employers a chance to end the working relationship on good terms.

Voluntary redundancies can be beneficial to the employer in several ways, including avoiding forced redundancies. Voluntary redundancies can ease the stress of termination. They can create a more amicable situation as employees are afforded a choice, rather than having redundancy forced upon them. 

Forced Redundancy

A forced or compulsory redundancy is when a job is no longer required, due to changes in operation. 

The reasons for compulsory redundancy must be genuine and due to a change in business circumstances.

Employees must be treated fairly throughout the process. Forced redundancy becomes unfair if an employer uses discriminatory measures to select employees to terminate, and/or does not consult with the employee throughout the process.

Have a workplace problem? 

Problems can arise in any workplace. Whether you’re an employer or an employee, we’re here to help.

At wilson/ryan/grose in Townsville and on the Sunshine Coast, we have been proudly servicing our clients with leading legal advice for over 125 years. If you feel you have been subjected to adverse action regarding your recent redundancy, give us a call on 1800 974 529. We can provide more information surrounding redundancies so that you know exactly where you stand.