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Redundancy and retrenchment

Last updated May 2024

This chapter explains your legal obligations when it comes to retrenching employees in redundant roles, including notice and pay obligations.

What are redundancy and retrenchment?

Definition: Redundancy

A redundancy occurs when an employer no longer requires a particular job to be performed by anyone due to changes in the operational requirements of its business.

A job becomes redundant when the employer no longer desires to have it performed by anyone. This can occur either when the role no longer exists or the duties have so changed that for all practical purposes the original role no longer exists.

A redundancy may also arise upon the redistribution of job functions, where the duties performed by an employee are redistributed among other employees. While the employer still requires the duties to be performed, the reorganisation means the original role no longer exists.

When a position becomes redundant, you may need to terminate the employment of the employee in that role, i.e. retrench them.

Definition: Retrenchment

Retrenchment occurs when an employee’s employment is terminated because their job has become redundant.
Tip: Redundancy does not always lead to dismissal of the person performing the redundant job. When you arrange for an employee occupying a redundant position to fill another vacant position in your business, you will redeploy the employee to that job.