The real cost of AI redundancies in Australia

As businesses realise the potential of AI in the workplace, employees are increasingly being displaced by technology. What impact are AI redundancies in Australia having on businesses, and how can HR teams help their employees navigate this career upheaval? 

AI-driven redundancies are now commonplace, but not all are obvious. A CNBC article reports that “restructures” and “business optimisation” often hide the fact that job losses are due to AI replacing human workers, as such terms are seen to be more palatable. But however it’s described, there’s no hiding the fact that AI is causing large-scale job losses. 

The tech sector in particular has found itself susceptible to AI-led redundancies. According to Kingston Reid, Sydney “now ranks third globally for technology job losses in 2026, behind only Seattle and San Francisco.” WiseTech Global has cut 30% of its workforce, with Atlassian planning a 10% cut.

Danielle Wood, Chair of the Productivity Commission, notes that, “job losses stemming from AI adoption are expected to reach about 4%, or roughly 600,000 of the country’s 14.8million employees.” A report in March pointed to 5% fewer job adverts than at the same time last year, with AI taking over a lot of junior-level work. 

Increased AI adoption contributed significantly to the 268,000 retrenchments of Australian workers in 2025 – the highest figure since the post-pandemic rebound. AI job loss is no longer a minor issue, as it’s a topical concern for employees, who risk losing their livelihood, and HR leaders, who need to ensure redundancies are carried out fairly, legally, and ethically. 

According to the Fair Work Act, a redundancy is genuine when the employee’s job doesn’t need to be done by anyone and the employer followed the relevant consultation requirements. 

If AI is capable of doing work previously done by an employee, it follows that the work does not need to be done by anyone and therefore the redundancy is genuine. However, HR decision-makers should take legal advice before confirming any redundancies, not least because research by Careerminds found that 54.6% of HR leaders found that AI needed more human oversight than expected. 

Furthermore, a Forrester report forecasts that half of AI-attributed layoffs will be quietly reversed, in what is becoming known as the AI boomerang, as firms realise, “that replacing humans with machines isn’t always cheaper, or smarter.”

Clearly, it’s debatable whether all AI redundancies are genuine, and the financial and reputational damage to a business could be long-lasting. Before jumping straight to redundancies, HR leaders should be assessing whether AI adoption is expected to augment human output, rather than replace it. 

When AI is implemented within a company, the business can reduce the risk of unfair dismissal claims by: 

1. Confirming that the redundancy is genuine. 
2. Following consultation obligations.
3. Identifying potential redeployment options within the business. 
4. Supporting the employee throughout the redeployment or redundancy process. 

That’s where outplacement comes in. Offering outplacement support to employees when AI redundancies are on the horizon helps businesses to meet both their legal and ethical obligations, thereby mitigating the risk of legal action. 

Outplacement reduces the additional load on the HR team by: 

• Enabling them to manage their day-to-day responsibilities without the added pressure of managing retrenched employees.
• Ensuring legal obligations are met throughout the redundancy process. 
• Filling vacancies elsewhere in the business via redeployments. 

It also supports employees by:

• Identifying potential redeployment options within the business, enabling continuity of employment.
• Offering reskilling and upskilling opportunities to prepare for internal or external roles.
• Providing job-search advice in the form of resume and LinkedIn optimisation, career coaching, and interview prep.

When roles are at risk from AI, redeployment should be the first alternative considered by HR decision-makers. Not only does redeployment eliminate the need for redundancy, it also retains valuable institutional knowledge within the business and reduces external recruitment costs by hiring from within. 

When AI redundancies loom, outplacement companies are a valuable business partner. Not only engaged to help retrenched employees to find new roles externally, they can also help with internal redeployment too. 

During a complex merger, acquisition, or restructure, it’s easy to overlook strong internal talent. Working with an outplacement company can help to place at-risk employees in internal vacancies. 

Outplacement coaches can ease transitions by matching skills with opportunities and providing the coaching, upskilling, and reskilling that displaced employees need to succeed in alternative roles within the business. 

The benefits are clear: 

• Reduced hiring costs.
• Retained knowledge and skills.
• Less legal exposure.
• Increased morale among surviving staff.
• Positioning as a people-focused employer of choice. 

Unnecessary layoffs cost businesses in terms of rehiring costs, severance packages, reputational damage, brain drain, lower morale, and decreased productivity so, while AI redundancies in Australia are currently happening at an unprecedented speed, the tide may be turning. 

Research among HR leaders by outplacement specialist Careerminds found that: 

• 75% of AI redundancies cost more than they saved.
• 91.6% would rethink their AI layoffs.
• 52.1% rehired eliminated roles within 6 months.

More worryingly, 55.1% never formally discussed redeployment before acting, leaving them open to costly and reputation-damaging unfair dismissal claims. HR leaders would be wise to implement a transition period to monitor the actual, rather than the forecasted, impact of AI on both the business and its employees, before making long-term decisions.

AI workforce reduction in Australia is subject to the same legal and ethical requirements as other redundancies. Employees are entitled to redundancy pay, based on the length of their continuous service with the employer, and they are also entitled to a notice period (or pay in lieu). 

Outplacement is not a legal entitlement, but an increasing number of companies choose to offer this form of transition support during AI workforce reductions in Australia. By offering outplacement as one of their AI redundancy entitlements, businesses protect their reputation, making future talent attraction and retention easier. They also maintain morale among surviving employees, who see that the workforce is valued and treated well even when the going gets tough. 

AI and automation is increasingly being used to cut costs and increase efficiency, particularly in the tech, administration, customer service, logistics, and financial sectors. Outplacement and redeployment can help HR teams take a human-first approach to AI redundancies. 

Before implementing AI-led redundancies, HR leaders must ensure the redundancy meets the requirements of the Fair Work Act to be classed as a “genuine redundancy,” and should work with an outplacement partner, such as Careerminds, to support affected workers back into employment – whether through redeployment or external opportunities. 

AI is already making jobs redundant in Australia, with 600,000 roles predicted to be eliminated. Conversely, AI will also create jobs, some of which have never existed before. The role of HR is to ensure that redundancies are legally compliant and do not impact talent attraction and retention in the future. 

Redundancies, for any reason, must be communicated with transparency and empathy. Offering early access to outplacement support ensures that HR teams minimise legal and reputational risk, while preserving the trust of both retained and departing employees.

While AI will not replace HR leaders quite yet, HR professionals need to embrace and adopt AI within their work. Those that don’t are more at risk of redundancy, as businesses recognise the efficiency benefits of AI in screening resumes, completing administration, drafting contracts, and other routine tasks. 

While AI has had a major impact on the Australian workforce, particularly for entry-level and tech jobs, it has not been the cost-saver expected for many businesses. Before progressing with AI-led redundancies, HR teams should ensure legal compliance, explore redeployment options, and provide people-first support to departing staff by partnering with an outplacement firm. 

Careerminds is a global outplacement specialist with local insight. Speak to one of our experts to discuss your workforce challenges.