For a redundancy to be genuine, a consultation process needs to be conducted between employer and employee, which also provides the opportunity for a positive relationship to remain upon employee exit. A genuine redundancy process requires the employer to consider the following prior to making a decision of termination:
- Notify the employee of proposed changes;
- Hold a meeting to consult and discuss the pending redundancy; and
- Consider options to see the employee remain working for the company but in a differing role. For companies with more than 15 employees: Should there be any vacant role within the Company or associated establishments, then the employer must offer such vacancies to this employee, if they are reasonably skilled to fulfill the role.
Written notice is required to notify an employee of the intended day of termination/ end of employment. Notice may be delivered:
- In person to the employee’s last known address;
- By postal mail or courier to the employee’s last known address;
- In person in the workplace;
- Electronically by email or text if predetermined with the employee.
Redundancy Pay – is it for all?
Redundancy pay is not applicable to all employees when their job is made redundant. It is not paid to:
- An employee whose continuous service is less than 12 months;
- Casual employees;
- Trainee employees who are yet to complete the training (have only been hired for the period of training).
- Employees who work seasonal, contract for a specified period of time, or whom have been employed to conduct a specified task or project;
- An employee that is being fired for serious misconduct; or
- Employees of a small business.
An employer must make redundancy payments to employees in accordance with an employee’s continuous period of service with the Company. This amount is to be at the base rate of the employee’s ordinary pay, not inclusive of; loadings, monetary allowances, overtime, penalty rates, bonuses, or any other incentive based payments. Below are the minimum periods of ordinary weekly pay owed to an employee, in reference to how many years of continuous employment the employee has worked for the Company:
- At least 1 year but less than 2 = 4 weeks
- At least 2 years but less than 3 = 6 weeks
- At least 3 years but less than 4 = 7 weeks
- At least 4 years but less than 5 = 8 weeks
- At least 5 years but less than 6 = 10 weeks
- At least 6 years but less than 7 = 11 weeks
- At least 7 years but less than 8 = 13 weeks
- At least 8 years but less than 9 = 14 weeks
- At least 9 years but less than 10 = 16 weeks
- At least 10 years = 12 weeks *
*There is a reduction in redundancy pay after 10 years of continuous service, this is in accordance with the 2004 Redundancy Case decision.
Reducing Redundancy Pay
Redundancy payments can be reduced if an employer approaches the Fair Work Commission to apply for such. This is possible in the event that:
- The employer can’t afford the amount of redundancy payment owing; or
- The employer finds another form /reasonable form of employment for the employee.
Assurance HR specialise in HR Management, often acting as a third party specialist to ensure compliance with Fair Work and other workplace laws. Call us today on 1800 577 515 and speak with us about how we can assist you through the new hire and dismissal/termination processes, ensuring you remain consistent and compliant by maintaining best practice.