When you undertake restructures in your businesses redundancies may occur when roles no longer need to be performed. When that occurs, many employers will immediately refer to the National Employment Standards contained within the Fair Work Act 2009 (the “Act”) to work out employee entitlements. However, a range of factors can result in employee entitlements being referenced from elsewhere.
Small business redundancy provisions
Section 121 of the Act provides an exclusion for national system small business employers from the obligation to pay redundancy pay to employees. The Act defines a small business employer as one who employs less than 15 employees at the time of redundancy. However, the drafting of section 121 of the Act would not immediately result in the reasonable person otherwise thinking an applicable national system Award may contain terms overriding that exclusion.
Although the Award transitional process resulted in some Award derived small business redundancy provisions becoming moribund and disappearing, a number retain redundancy provisions and that continue to apply to small businesses.
The following national system Awards create redundancy entitlements for employees of small businesses:
- TEXTILE, CLOTHING, FOOTWEAR AND ASSOCIATED INDUSTRIES AWARD 2010 – Clause 19.3
- TIMBER INDUSTRY AWARD 2010 – Clause 15.7
- JOINERY AND BUILDING TRADES AWARD 2010 – Clause 17.2
- MANNEQUINS AND MODELS AWARD 2010 – Clause 12.2
- MANUFACTURING AND ASSOCIATED INDUSTRIES AND OCCUPATIONS AWARD 2010 – Clause 23.2
Industry specific redundancy schemes
A number of the national system Awards continue to retain industry specific redundancy schemes that can apply in instances of redundancy. As a result, numerous Awards contain such provisions that allow an employer to offset redundancy entitlements through contributions to those schemes
The following national system Awards contain industry specific redundancy schemes:
- MOBILE CRANE HIRING AWARD 2010 – Clause 12
- BUILDING AND CONSTRUCTION GENERAL ON-SITE AWARD 2010 – Clause 17
- PLUMBING AND FIRE SPRINKLERS AWARD 2010 – Clause 18
- BLACK COAL MINING INDUSTRY AWARD 2010 – Clause 14
Down the rabbit hole and out again
We provide a list of recommendations and actions for your consideration:
- When instances of redundancy occur in a business, employers should review all relevant industrial instruments when calculating relevant entitlements. This includes the Act, relevant Awards, contracts of employment and may include an applicable enterprise agreement.
- Review the relevant national system Award for specific redundancy terms that apply and may be more favourable than the legislative minimum. Carry this review through to any contract of employment or an enterprise agreement. If a more favourable entitlement is applicable it usually takes precedence.
- Check if the terms of a relevant industry redundancy scheme apply and confirm whether otherwise exempt employees may have a redundancy pay entitlement.
- Although redundancy pay (used to be called the severance component) may not be payable, notice or payment in lieu will likely be payable, along with other accrued entitlements such as annual leave and long service leave depending upon the length of the employee’s service.
- A variety of employees may not be entitled to redundancy pay due to the nature of their employment. These can include casual employees, employees with less than 12 months continuous service, employees employed for a specified time or task, some seasonal workers, and daily hire employees in the building and construction industry.
- Apprentices or employees on training arrangements whereby their employment is for the duration of the training arrangement are also likely to be exempt from an entitlement to redundancy entitlements. However, time worked as an apprentice or trainee may count if the employment continues after the completion of the training period.
- Finally, as part of the redundancy process employers need to ensure they apply appropriate consultation processes and procedures, that will also be derived from the relevant industrial instruments, so that if challenged the redundancy will be held to be genuine.
- Put everything in writing for record related, and evidential, purposes.
If you have any doubts as to the way you are handling redundancy scenarios in your businesses contact Better HR. Our HR and employment law experts can help provide plain-English HR advice to help you.
General Manager Human Resources