Redundancy Selection Criteria: Choosing Fairly Without Triggering Unfair Dismissal Claims

Making employees redundant is one of the hardest decisions a business owner or HR manager has to make. But when the business no longer needs certain roles, redundancy is sometimes the only option.

What Makes a Redundancy Fair?

Under the Fair Work Act 2009, a dismissal is a genuine redundancy only if:

1. The employer no longer needs the job done by anyone.
2. The employer has followed a fair process (including consultation).
3. The employer has looked at redeployment options.

• Your criteria were clearly set out before selection began.
• You applied the same criteria to everyone in the selection pool.
• You didn’t rely on subjective factors like “fit” or “personality”.
• You considered relevant skills, qualifications, and performance data.
• You documented your decisions.

Step 1: Define Your Selection Pool

The first step is deciding who’s eligible for redundancy selection. This isn’t arbitrary—it depends on your operational needs.

• All Payroll Managers in your organisation.
• All people in the Payroll/Finance team (if roles are similar).
• All office-based staff (if you’re restructuring the entire office).

Step 2: Set Out Objective Criteria Before Selection

This is critical. You must define your selection criteria before you know who will be selected.

• Skills and qualifications: Does the role require specific certifications, experience, or technical knowledge? Define what matters for the remaining work.
• Relevant experience: How many years in this type of role? Experience with specific systems or processes?
• Performance ratings: If you use performance reviews, define which ratings matter. Be specific: “employees with a current rating of Meets Expectations or higher” or “no performance improvement plan in the last 12 months”.
• Flexibility and adaptability: Can the employee move into other available roles? Willingness to retrain?
• Attendance and reliability: Absence rates, punctuality, timeliness. Use data, not impressions.
• Safety compliance: If relevant, safety training completion, incident history.
• Customer or team feedback: Only if documented and consistent. Avoid vague comments like “difficult personality”.

• “Cultural fit” or “team fit”.
• “Attitude” or “potential”.
• “Works well under pressure” (unless you define this with metrics).
• “Gets things done” without context.
• Manager preference or personal judgment calls.

Step 3: Consider Redeployment First

Before you make anyone redundant, you’re obligated to explore whether they can move into another role. If there’s suitable alternative work available, and the employee is willing and able to do it, you must offer redeployment.

Step 4: Apply Criteria Consistently

Score every person in your selection pool using the same criteria. Don’t make exceptions or adjust the process for certain people.

If the data says Employee A scores highest on flexibility and Employee B scores highest on experience, you can’t ignore that because you prefer working with Employee B.

Document your scoring. Keep the matrix. Keep the evidence (performance reviews, attendance records, skill assessments). If the Fair Work Commission asks, you need to show your working.

Step 5: Consult Before Final Decision

Before you confirm who’s being made redundant, you must consult with affected employees and any union or employee representatives. Tell them:

• Why the role is redundant.
• How you’ll select who to redundant (your criteria).
• The timeframe for the decision.
• Redeployment options.
• Entitlements (redundancy pay, notice period).

Step 6: Make the Decision and Notify

Once you’ve applied your criteria and consulted, make your final decision. Select the lowest-scoring employees (or those not selected for redeployment).

• The last day of employment (with notice period or payment in lieu).
• Redundancy pay amount.
• Explanation of the redundancy and your selection process.
• Information about final pay, superannuation, and leave entitlements.

Common Pitfalls to Avoid

Setting criteria after deciding: This kills your defense. Always set criteria first, apply them second.

What if Multiple Employees Score the Same?

Sometimes your matrix will show two or three people with the same score. You can’t make a fair selection if you can’t differentiate.

• Revise your criteria: Add a tiebreaker criterion (e.g., “where scores are equal, we retain the employee with the most recent relevant qualification”).
• Offer a choice: If you have a redeployment opportunity only one person can take, let them apply or interview for it.
• Use last-in-first-out (LIFO): Some industries or awards specify this. But only if it’s genuinely objective and defensible in your context.

Redundancy Pay and Notice Requirements

Once you’ve selected who’s being made redundant, you must comply with National Employment Standards:

• Notice period: 1 week for employees under 2 years’ service; 2 weeks for 2+ years; 4 weeks for 5+ years; 8 weeks for 10+ years. Or pay in lieu.
• Redundancy pay: 4 weeks’ ordinary pay per year of service (up to $79,250 max) for employees 20+ years. Employees under 2 years get no redundancy pay. Small businesses (<15 employees) have no legal obligation, but best practice is to pay.
• Final pay: All accrued leave (annual, long service, etc.) is paid out on the final day.

Will This Protect You From an Unfair Dismissal Claim?

A clear, objective, documented selection process won’t guarantee you’ll win an unfair dismissal claim—but it gives you a strong defense. The Fair Work Commission wants to see:

• Evidence the role was genuinely redundant.
• A fair selection process with clear criteria.
• Proper consultation.
• Consideration of redeployment.
• Compliance with notice and pay obligations.

Key Takeaway

Objective selection criteria protect both you and your employees. They show you’re making difficult decisions fairly and consistently—not targeting individuals or acting arbitrarily. Document the process, stick to it, and you’ll have a clear, defensible record if you ever need it.