Redundancy Entitlements During Business Restructures and Acquisitions

Last Updated on 23/09/2026 by Damin Murdock and Nohra Chalouhi

Redundancy during a restructure or business acquisition is not always straightforward. Employees may find their reporting lines, management structure, duties or even employer changing and assume that they are automatically entitled to redundancy pay. However, significant organisational change does not necessarily mean that an employee’s job has been made redundant.

Under the Fair Work Act 2009 (Cth), redundancy entitlements depend on what has actually happened to the employment relationship and the employee’s job. For employees affected by a restructure or acquisition, three questions can be particularly important: who ended the employment relationship, did the employee’s job actually cease to exist, and was substantially similar and no less favourable alternative employment offered?

Did the Employee Resign or Was Their Employment Terminated?

The first question is whether the employee left by choice or whether the employer terminated their employment. This distinction matters because an employee who resigns will generally not be entitled to redundancy pay. Section 119 of the FWA requires the termination to occur at the employer’s initiative.

A trap that employees may inadvertently find themselves in is that resignation does not necessarily have to be made formally or in writing. In Koutalis v Pollett [2015] FCA 1165, the Court held that whether an employee has resigned is determined objectively by looking at their words and conduct and asking what a reasonable person would have understood them to mean. In that case, the employee said that he did not want to continue working and wanted to leave as soon as possible. Those statements, together with his conduct and his intention to start his own business, were sufficient to amount to a resignation.

However, not every statement about leaving employment will have that effect. In Marks v Melbourne Health [2011] FWA 4024, an expression of an intention to resign at some unspecified point in the future was not enough to constitute an effective resignation. The context in which the words are spoken is also important, and Courts will generally carefully ascertain the effect of words spoken in the heat of the moment. In Sawyer v Wards Accounting Group Pty Ltd [2025] FWCFB 167, statements made during a serious disagreement about the future operation of the business were not reasonably understood as a resignation, particularly given the employee’s lengthy employment of nearly 16 years.

Employees should therefore be cautious about stating that they intend to resign while discussions about a restructure are still taking place. Once valid notice of resignation has been given, it ordinarily cannot be withdrawn without the employer’s agreement.

Did the Employee’s Job Actually Cease to Exist?

If the employer, rather than the employee, brought the employment relationship to an end, the next question is whether the employee’s job was genuinely no longer required.

Under section 119 of the FWA, redundancy is concerned with the disappearance of the job, not simply a change to the organisation in which that job is performed.

This means that a restructure does not automatically create a redundancy. An employee’s duties, remuneration, seniority, hours, location, responsibilities and reporting arrangements may all be relevant when determining whether the substantive job continues to exist. For example, an employee may be moved into a different division or required to report to a different manager while continuing to perform substantially the same work on the same pay and conditions. In those circumstances, the employee’s job may not have ceased to exist at all.

The distinction is especially important during acquisitions. An employee may experience a significant organisational change but still be offered substantially the same employment within the new structure. Whether that employee is entitled to redundancy pay will then depend not only on whether their original employment ended, but also on the nature of any alternative employment offered.

What Happens if the Employee Rejects Alternative Employment?

Even where an employee’s employment with their existing employer comes to an end, an offer of employment from another employer may affect their entitlement to redundancy pay.

Section 122(3) of the FWA provides that an employee may not be entitled to redundancy pay where they reject an offer from another employer that is on terms and conditions substantially similar to, and overall no less favourable than, their existing employment. The new employer must also recognise the employee’s prior service, and accepting the offer must have resulted in a transfer of employment.

Whether an offer satisfies this test depends on the circumstances. Relevant factors may include salary, benefits, duties, seniority, working hours, location, reporting arrangements and job security. A change in one aspect of a role will not necessarily make the new employment less favourable overall.

Manheim Pty Ltd v Cordiner [2019] FWC 534, which concerned a restructure, provides an example. The employee objected to an alternative role partly because it involved reporting to a former peer. However, the Commission found that the remuneration and the managerial character and substance of the role remained materially unchanged. The altered reporting line did not, by itself, make the alternative employment unacceptable.

At the same time, employees must be given enough information to properly assess what they are being offered. Section 122(4) allows the Fair Work Commission to order redundancy pay where excluding the employee’s entitlement under section 122(3) would operate unfairly.

In Simon Gravenall [2020] FWC 4499, the employee was offered employment with the business that had acquired his existing employer. However, the communications about the new role were unclear, the proposed employment contract was provided late, and there was uncertainty about whether his prior service would be recognised. The Commission ultimately found that denying him redundancy pay would operate unfairly in the circumstances.

The comparison between these cases is important. An employee cannot necessarily refuse a substantially similar role simply because they dislike a particular change, such as a new reporting line. Equally, an employer cannot assume that an employee has rejected suitable employment where the terms of that employment have not been communicated clearly enough for the employee to make an informed decision.

Ultimately, redundancy entitlements during restructures and acquisitions depend on the substance of what has occurred. Employees should consider, in order, whether they have actually resigned, whether their job has genuinely ceased to exist, and whether any alternative employment offered is substantially similar and no less favourable overall. Those distinctions can determine whether redundancy pay is available or whether the employee’s own decision to leave or reject ongoing employment prevents an entitlement from arising.

Need Advice? 

At Leo Lawyers, we understand that restructures and acquisitions can leave employees uncertain about their job security, redundancy entitlements and whether they should accept a proposed alternative role. Employees may feel pressured to make important decisions quickly, often without clear information about how their duties, seniority, reporting lines or conditions will change. We assist employees to understand their rights, assess whether redeployment is genuinely comparable and protect their entitlements before resigning, rejecting an offer or agreeing to new employment arrangements.

Feel free to contact Damin Murdock at Leo Lawyers via our Website, on (02) 8201 0051 or at office@leolawyers.com.au. Further, if you liked this article, please subscribe to our newsletter via our Website, to our YouTube, LinkedIn, Facebook and Instagram, and kindly give us a favourable Google Review.

DISCLAIMER: This is not legal advice and is general information only. You should not rely upon the information contained in this article and if you require specific legal advice, please contact us.