Redundancy vs termination: what’s the difference and why it matters

If you’re an employer facing workforce changes, or an employee who’s just been told your job is ending, one question matters more than almost any other: is this a redundancy or a termination. The two terms get used all the time interchangeably. Legally, they’re not the same thing, and mixing them up can be costly. Get it wrong as an employer, and you could face an unfair dismissal or general protections claim through the Fair Work Commission. Here’s how to tell the difference.

What is redundancy?

Redundancy happens when a role disappears. It’s not because of anything the employee did, but because the business no longer needs that job. Common triggers include:

• Restructuring or reorganisation.
• Automation or new ways of working.
• A decline in demand for a product or service.
• Closure of a site, department, or the whole business.
• Outsourcing of the work to another provider.

Under Section 389 of the Fair Work Act 2009 (Cth), a dismissal is a genuine redundancy if the employer no longer requires the job to be performed by anyone due to changed operational requirements, and the employer has complied with any consultation obligations in an applicable award or enterprise agreement. A dismissal won’t count as a genuine redundancy if it would’ve been reasonable to redeploy the employee elsewhere in the business or an associated entity. Crucially, redundancy is about the position, not the person.

Redundancy comes with legal protections and entitlements, including:

• Redundancy pay under the National Employment Standards (NES), for employees with at least 12 months’ continuous service, ranging from 4 weeks’ pay (1–2 years’ service) up to 16 weeks’ pay (9–10 years’ service), before reducing to 12 weeks’ pay for 10+ years’ service.
• A notice period (or payment in lieu), on the same NES scale as any other dismissal.
• Genuine consultation about the change, where required by an award or enterprise agreement.
• Consideration of reasonable redeployment options within the business or associated entities.
• A key exception: small business employers (fewer than 15 employees) are generally exempt from paying redundancy pay under the NES, though notice still applies.
If a redundancy is genuine, there’s no unfair dismissal risk to the business.

What is termination?

Termination is the broader umbrella term for any ending of employment. Redundancy is technically one type of termination, but the phrase “termination” is usually used to describe dismissals that relate to the individual employee, such as:

• Performance-related dismissal.
• Misconduct or serious misconduct.
• Breach of contract.
• Mutual agreement to end employment.
• Expiry of a fixed-term contract or task.

Unlike a genuine redundancy, a standard termination doesn’t come with redundancy pay, though NES notice entitlements (or payment in lieu) still generally apply. Employers still need a valid reason and a fair process to avoid an unfair dismissal claim, and dismissals motivated by a prohibited reason (such as discrimination or exercising a workplace right) can trigger a general protections claim, regardless of how the dismissal is labelled.

Redundancy vs termination: key differences at a glance

Why the distinction matters

Misclassifying a termination as a redundancy, or getting the genuine redundancy test wrong, is one of the most common causes of successful unfair dismissal and general protections claims before the Fair Work Commission. If a business makes someone “redundant” but a reasonable redeployment option existed and wasn’t offered, or the role is simply refilled soon after, the redundancy defence can fail. Getting the process, consultation, and redeployment assessment right from the outset protects the business from costly claims and reputational damage.

Getting it right

Both redundancy and termination processes carry legal risk if handled incorrectly. A genuine redundancy requires evidence that the role, not the person, is no longer required, compliance with any consultation obligations in an award or enterprise agreement, and genuine consideration of reasonable redeployment options. A termination for cause requires a valid reason, a fair process, and an opportunity for the employee to respond before any decision is made.

Getting this wrong doesn’t just risk a Fair Work Commission claim. It costs time, morale, and money. That’s why having clear HR policies, documented processes, and expert guidance in place is essential.

Don’t let a routine redundancy become an unfair dismissal claim. Reserve your free spot and get the framework to run redundancies that hold up — legally and practically.

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Not sure if your situation is a genuine redundancy?

Getting the genuine redundancy test wrong, or mishandling a termination, can expose your business to unfair dismissal and general protections claims. Citation’s HR and employment law specialists can review your process, guide you through consultation and redeployment obligations, and help you manage the situation correctly from day one. Speak to the Citation HR team today for expert support.

This article is for general information only and doesn’t constitute legal advice. Employment law can vary depending on individual circumstances, awards, and enterprise agreements, always seek professional guidance for your specific situation.