At times, for a variety of reasons, from downturn or closure, restructuring, or changing technology, certain jobs are no longer necessary in a business, leaving the employee without a valid role. When a worker is let go under these circumstances it’s not a dismissal, but a redundancy, and a different set of rules apply in these cases.
When a worker’s role is no longer required they are entitled to a payout in lieu of their work being no longer necessary. The amount of redundancy pay varies depending on how long an employee has been with the business, and also varies depending on the award they are covered under. As a minimum, however, the following is a guide to what to expect:
|Number of years worked in a business||How many week’s pay owed as redundancy pay|
|Between 1 and 2||4|
|Between 2 and 3||6|
|Between 3 and 4||7|
|Between 4 and 5||8|
|Between 5 and 6||10|
|Between 6 and 7||11|
|Between 7 and 8||13|
|Between 8 and 9||14|
|Between 9 and 10||16|
|More than 10||12*|
* There is a reduction in redundancy pay from 16 weeks to 12 weeks for employees with at least 10 years continuous service. This is consistent with the 2004 Redundancy Case decision made by the Australian Industrial Relations Commission.
Leading up to a redundancy
There are certain steps that need to be taken in a redundancy situation. It’s vital that you communicate clearly with your employees, and give them adequate notice about the upcoming changes. As with the amount of severance pay to be received, the amount of notice given is also on a sliding scale, with reference to how long they’ve worked for the business. Note, if you are unable to give an appropriate amount of notice (for instance, the business needs to close immediately), you must make payment in lieu on top of their redundancy pay.
|Period of employment||Amount of notice to be given|
|Less than a year||1 week|
|Between 1 and 3 years||2 weeks|
|Between 3 and 5 years||3 weeks|
|More than 5 years||4 weeks|
As with most things, the information regarding redundancy may be slightly different under different awards or in different industries. Don’t get caught out in the fine print, if you’re looking at making staff redundant at any time talk to Assurance HR. We can make sure you’re covering everything properly. Give us a call any time on 1800 577 515.