Redundancy in Medical and Healthcare Practices: What Employers Need to Know
In Australia’s dynamic medical and healthcare sector, organisational restructures, changes in funding, or shifting service demands can lead to the difficult but sometimes necessary decision to make a role or roles redundant. Whether you are a healthcare employer navigating structural change, or an owner feeling the uncertainty, understanding your legal rights and obligations is key.
Redundancy can be emotionally and practically challenging for all involved. However, when managed properly, it can be a transparent, fair, and legally compliant process that allows both businesses and individuals to move forward with confidence and respect.
What is redundancy, and when does it happen?
Redundancy occurs when an employer no longer requires an employee’s job to be performed by anyone. This is often due to changes in operational requirements or business direction and not due to the employee’s performance.
Common examples in healthcare include:
The closure of a clinic or service due to funding cuts or demand changes.
Technological advancements reducing the need for certain administrative roles.
Mergers or acquisitions leading to role duplication.
Relocating services to another site or state.
While it’s true that redundancy is about the role, not the individual, many employers get caught out by treating it as a performance or personality issue. If you can’t demonstrate that the role is no longer required, or fail to explore reasonable redeployment options, you risk unfair dismissal claims, reputational damage, and costly legal disputes.
Types of redundancy
The most common form of redundancy is a genuine redundancy, which occurs when a role is no longer needed.
In some cases, employers may offer a voluntary redundancy, inviting employees to step forward, often with a financial incentive. This can support a smoother transition and preserve morale.
A hybrid approach may also be used, starting with voluntary expressions of interest before moving to select roles for redundancy if needed. This can provide greater flexibility while still meeting your legal and operational requirements.
What are your legal obligations as an employer?
To minimise the risk of unfair dismissal claims or reputational harm, medical and healthcare employers should approach redundancy with care, ensuring it is genuine and aligns with the requirements of the Fair Work Act 2009 (Cth). Moving too quickly or making a rushed decision could result in a staff member pursuing an unfair dismissal claim, costing you money, time and energy, pulling your focus away from running your practice and caring for your patients.
1. Consultation
Where an employee is covered by a modern award or enterprise agreement, such as the Health Professionals and Support Services Award employers have a legal obligation to undertake a genuine consultation process before finalising a redundancy.
This process involves more than simply informing the employee. Employers must provide relevant information, consider any feedback, and appropriately document the process. Even well-intentioned missteps can result in the redundancy being found not to be genuine, creating exposure to legal and financial risk.
Seeking legal advice ensures your consultation process is compliant, thorough, and aligned with your obligations.
2. Consider notice and redundancy pay
When a role is made redundant, the National Employment Standards (NES) set out certain entitlements that may apply, including notice and redundancy pay. However, eligibility and payment calculations can vary depending on a range of factors, such as the size of the business, the type of employment, and the length of service.
It is not always straightforward. Misunderstanding who is entitled, how payments are calculated, or when exemptions apply can expose employers to underpayment claims or disputes. These issues are often more complex than they first appear.
Getting it wrong can cost you more than just money, it can damage staff trust and distract your team from the work that really matters.
3. Explore redeployment options
Before finalising a redundancy, employers are expected to assess whether a suitable alternative role exists for the affected employee, either within the practice or a related entity. What counts as “reasonable” redeployment is not always clear-cut and may depend on:
The location and nature of the alternative role;
How closely it aligns with the employee’s qualifications and experience; and
Whether additional training is practical or appropriate.
Other factors, such as pay, working conditions, and the employee’s willingness to accept the role, also come into play.
If any of these steps are rushed or handled poorly, it can undermine the entire redundancy process and expose your practice to legal and operational risk, leading to costly disputes and reputational harm.
How to support your employees who are leaving
Supporting employees through redundancy is not only the right thing to do, it can help preserve goodwill within your team. How you manage this process reflects your values as an employer. Never underestimate the impact of taking away someone’s livelihood; when handled with care and respect, exiting employees can continue to speak positively about your business long after they leave.
Support may include:
Counselling services or access to an Employee Assistance Program (EAP).
Financial advice (particularly for employees nearing retirement).
Time off to attend interviews or job-search activities.
Practical outplacement support.
A statement of service or professional reference.
A farewell morning tea or lunch to acknowledge the employee’s contribution and maintain workplace morale.
Providing this support helps reduce anxiety for the exiting employee, reassures remaining staff, and upholds the reputation of your practice in the community.
Special considerations in healthcare
Healthcare employers have additional responsibilities when roles are made redundant. These include managing continuity of patient care, ensuring proper clinical handover, and maintaining accurate medical records.
For registered health professionals, any redeployment must ensure the role remains within their scope of practice and complies with AHPRA registration requirements.
Where independent contractors are engaged, redundancy laws do not apply in the same way. However, care must be taken to ensure contractors are not in fact misclassified employees, as this can lead to legal risks, especially regarding termination and entitlements.
Practical tips for healthcare employers
Plan ahead: Anticipate staffing needs and potential changes to avoid rushed decisions.
Communicate transparently: Keep employees informed at every stage of the process.
Document everything: From consultation notes to decision-making rationale, maintain accurate records.
Be compassionate: Redundancy affects confidence and autonomy. Handle the process with empathy and care.
Review your obligations: Check awards, agreements, and contracts carefully and proceed with considered legal advice. It is always worth the investment.
Conclusion
Redundancy is a difficult but sometimes unavoidable part of leading a healthcare business and having clarity about your legal obligations and rights helps ensure the process is handled fairly and respectfully.
Handled well, redundancy can be the start of a new chapter for both employers and employees. Handled poorly, it can lead to costly legal claims, reputational damage, and breakdowns in trust – including in your remaining team.
Need help navigating a redundancy?
At You Legal, we support healthcare employers with practical, clear legal advice. Whether you’re planning a restructure or unsure about how to handle redundancy, our team is here to help.
Contact us today to receive tailored legal advice.
Our team has extensive experience guiding employers through the complexities of redundancy and restructuring. We help ensure your approach is legally compliant, minimises risk, and aligns with best practice in the healthcare sector. If you are considering making a role redundant or undertaking a broader restructure, contact our team today, and we will help you navigate the process with confidence and clarity.