Workplace Law: Taking a Redundancy
If an employer offers you a redundancy it pays to know your legal entitlements, writes TGB’s Ben Smith.
Redundancy occurs when an employer no longer requires the job done by the employee to be done by anyone and makes that job redundant.
There can be numerous reasons why this might happen. For example, the business restructures and the position is no longer required, or due to a downturn in business the employer needs to reduce staff numbers.
As part of the Fair Work Act 2009 the National Employment Standards (NES) are 10 legislated minimum standards which apply to all employees covered by the national workplace relations system. Redundancy pay forms part of the NES.
To have any entitlement to redundancy pay an employee must have at least one year of continuous service with an employer that employs 15 or more employees (ie. not a small business).
An employee is entitled to redundancy pay by the employer if the employment is terminated at the employer’s initiative (except where this is due to the ordinary and customary turnover of labour) or because of the insolvency or bankruptcy of the employer.
Employees who are owed certain employee entitlements after losing their job because their employer went bankrupt or into liquidation may be able to obtain financial help through the General Employee Entitlements and Redundancy Scheme (“GEERS”) see: http://deewr.gov.au/eligibility-geers
It should be noted that if an employee did not have an entitlement to redundancy pay prior to 1 January 2010 an employee’s period of continuous service with the employer will only accrue from 1 January 2010.
An employer may apply to the Fair Work Commission for a Determination reducing the liability to pay redundancy pay to a specified amount if the Fair Work Commission considers it appropriate. A possible example of this would be if the employer cannot pay the amount.
In limited circumstances, particularly where there is a large-scale redundancy, an employer may offer more than the minimum amounts contained in the NES. There is no requirement for an employer to do so however employers may take into account special circumstances such as where an employee has invested considerable time and effort into their job or if they are close to retirement.
Terms contained in awards, enterprise bargaining agreements and employment contracts cannot exclude or provide for an entitlement less than what is provided in the NES. An employer must not contravene a provision of the NES. A contravention of a provision of the NES may result in hefty penalties to both individuals and corporations.
In addition to any entitlement to redundancy pay an employee is entitled to a notice period, or payment in lieu of notice.
Employees are also entitled to any accrued annual leave and long service leave which has not yet been taken. An employee has six years from the last day of employment to make a claim for underpayment of statutory entitlements.
In many cases it is advisable to instruct a lawyer to provide advice about your legal entitlements as well as assist in negotiating redundancy pay and ensuring that you receive what is fair in the circumstances.
Where there is a case of genuine redundancy, it will not be considered an unfair dismissal.