Disclaimer: This article is intended to provide a summary and general overview only. It is not intended to be, nor does it constitute, legal advice. You should seek legal advice from a lawyer (whether barrister or solicitor) working in the area of employment and/or human rights law before acting or relying on any of its content.
A redundancy occurs where an employee’s job is abolished or restructured, resulting in the termination of employment. The Fair Work Act 2009 (Cth) (the Act) provides that employees are entitled to redundancy pay if their employment is terminated:
What is a Genuine Redundancy?
In order to qualify for redundancy entitlements and escape claims for unfair dismissal, a genuine redundancy occurs when:
The employer no longer requires the performance of the employee’s job due to changes in the requirements of the operation of their enterprise; and
The employer has complied with award and enterprise agreement obligations relating to consultations about the redundancy.
There are circumstances where an employee’s position is made redundant, however is not entitled to redundancy pay. These include:
The resignation of an employee without any standing agreement with the employer for redundancy pay upon termination of employment;
Termination due to employee misconduct;
The employee arranges other acceptable employment for the employee, upon successful application to the Fair Work Commission;
The employee has been employed for a period less than 12 months;
The employer is a small business (less than 15 employees);
The employee’s fixed term has ceased;
The employee’s casual service is no longer needed;
The transferal of the employee to employment with a new employer; and
The inability to pay, upon successful application to the Fair Work Commission.
Notice is the period of time an employer must give to an employee between informing them of their termination of employment and their last day. Section 117(3) of the Act provides the following minimum periods of notice for termination:
Payment in lieu of notice
As alternatives, an employer is able to make a payment to the employee instead of providing the period of notice, or as a combination of notice and payment in lieu of notice: see section 117(2).
How Much Pay Will I Receive?
Redundancy payments are calculated at the employee’s base rate of pay for their ordinary hours of work. Section 119(2) of the Act provides the following periods of pay for redundancy against the total amount payable.
Periods of notice and redundancy pay are found in the National Employment Standards which apply as a minimum standard to all employees covered by the Act. If, however, an award, a negotiated amount under an enterprise agreement, or employment contract sets out greater entitlements upon redundancy, then the employer is required to pay this increased amount.
By Sebastian De Brennan, Barrister, email@example.com