Reducing Hours in a Job Can Trigger Redundancy – What Employers and Employees Need to Know
When most people think of redundancy, they picture roles being completely removed from a business. However, under Australian employment law, redundancy is not limited to job losses in the traditional sense. In some cases, reducing an employee’s hours significantly can also amount to a redundancy.
Understanding how and when this applies is important for both employers managing restructuring and employees facing reduced working hours.
What is redundancy?
Under the Fair Work Act 2009 (Cth), a role becomes redundant when:
- The employer no longer requires the job to be performed by anyone, or
- The employer’s operational requirements change, and the position is effectively abolished.
While this often involves full termination of employment, redundancy can also arise where a position is substantially altered—particularly when hours, duties, or earnings are significantly reduced.
When reducing hours may become redundancy
A reduction in hours can trigger redundancy considerations when it goes beyond a minor adjustment and fundamentally changes the role.
This may include situations such as:
- A full-time role reduced permanently to part-time
- A significant cut in weekly hours (for example, 38 hours reduced to 15–20 hours)
- Removal of core duties resulting in a materially different position
- A restructure where the original role no longer exists in its previous form
In these circumstances, the original position may be considered “no longer required,” even if the employee technically remains engaged.
Why this matters for employers
Employers often assume they can simply reduce hours as a cost-saving measure. However, if the change effectively abolishes the original role, it may trigger redundancy obligations, including:
- Consultation requirements under applicable awards or enterprise agreements
- Payment of redundancy pay (if applicable under NES entitlements)
- Proper notice of termination or change in employment conditions
- Risk of unfair dismissal claims if redundancy processes are not followed correctly
Failing to treat a substantial reduction in hours as a potential redundancy can expose businesses to legal and financial risk.
Impact on employees
For employees, a significant reduction in hours can have serious financial and practical consequences. Importantly, employees should be aware that:
- They may be entitled to redundancy pay if their role is effectively abolished
- A forced reduction in hours may allow them to refuse the change and treat it as termination
- They may be eligible to pursue unfair dismissal or general protections claims if the change is not handled correctly
- They should review their award, enterprise agreement, or contract before accepting reduced hours
Key test: Is it a “new job” or the “same job”?
A useful way to assess whether redundancy applies is to ask: Is this still substantially the same job, or has the role fundamentally changed? If the answer is that the role has been effectively replaced by a smaller or different position, redundancy obligations are likely to arise.
Best practice for employers
To manage risk, employers should:
- Clearly document the business reason for reducing hours
- Consult with affected employees before implementing changes
- Consider whether the original position is genuinely no longer required
- Explore redeployment options before finalising any redundancy
- Seek legal or HR advice before implementing significant changes
Final thoughts
Reducing hours is often seen as a flexible alternative to redundancy, but in practice, it can sometimes be a redundancy in disguise. Both employers and employees should carefully assess the nature of the change rather than assuming it is simply a minor adjustment.
Getting the classification right from the outset helps ensure compliance, reduces dispute risk, and leads to more transparent workplace outcomes.