Are you aware of your obligations regarding redundancy legislation? Have you considered any transitional provisions that may apply?
Ensure you have updated your redundancy processes if you are considering restructuring and reducing employee numbers. Under the Fair Work Act 2009 employers must prove 'genuine redundancy'. Recent cases highlight how critical it is to consult and to consider other jobs in the company, even if they are lower paid.
To prove ‘genuine redundancy’, employers must:
- no longer require the person's job to be performed by anyone because of changes in the operational requirements of the employer's enterprise;
- comply with any obligation in a Modern Award or Enterprise Agreement to consult about redundancy including asking the employee to consider a lower paid job; and
- show that it would have not been reasonable to redeploy the employee within the employer's enterprise or within an enterprise of an associated entity of the employer.
How much redundancy pay?
Under The National Employment Standards (NES) employees working under Commonwealth workplace laws may be entitled to redundancy payments if they:
- have at least 12 months continuous service and
- work for an employer that employs 15 or more employees
The NES provides a minimum scale of payments, however employers must also check the relevant Modern Award and premodern Award applying to the employee. Until 2014 the provisions in the pre modern Award must be considered if they are more favourable than the Modern Award.
The NES redundancy scale is as follows:
| Employee’s period of continuous service Period with the employer on termination |
Redundancy Pay |
| At least 1 year but less than 2 years | 4 weeks |
| At least 2 years but less than 3 years | 6 weeks |
| At least 3 years but less than 4 years | 7 weeks |
| At least 4 years but less than 5 years | 8 weeks |
| At least 5 years but less than 6 years | 10 weeks |
| At least 6 years but less than 7 years | 11 weeks |
| At least 7 years but less than 8 years | 13 weeks |
| At least 8 years but less than 9 years | 14 weeks |
| At least 9 years but less than 10 years | 16 weeks |
| At least 10 years | 12 weeks |
For assistance in understanding which provisions apply to your staff; how much, if any, redundancy pay they are due; and the best practice redundancy process to follow, please contact us.