Note: Redundancy severance pay provisions
for
many employees working in workplaces with less than 15 employees were
removed in December 2005 by the federal government's 'Workchoices'
package.
Redundancy means
essentially that the employer no longer wants the job the employee is
doing to be done by anyone, and that the employee cannot be redeployed
to another job within the business.
It may come about because
of a downturn in work volume that the employer has to do, or due to a
restructuring of the business.
A redundant worker is
entitled to Notice of Termination, and many but not all are also
entitled to a
redundancy / severance payment.
These are two different
elements, although both are based on the length of time of employment
(see Notice).
Redundancy amounts vary
widely between workplaces, and between states. The amount a
particular employee may be entitled to receive could be set by either
state legislation or by Awards and
Certified Agreements
or the employee's individual contract of employment. Redundancy /
severance is not included in Victorian Minimum
Wage Orders.
Redundancy severance amounts
The following table sets
out the main Federal Award and NSW state provisions - amounts in other
states differ again.
The Federal Award
provisions were decided by the Australian Industrial Relations
Commission (AIRC) in March 2004.
Length of service
|
Federal Award
standard
|
NSW Standard :
Under 45 / Over 45
|
Less than 1 year
|
Nil
|
Nil / Nil
|
1 year - less than 2
years
|
4 weeks
|
4/5 weeks |
2 years - less than
3 years
|
6 weeks |
7/8.75 weeks |
3 years - less than
4 years
|
7 weeks |
10/12.5 weeks |
4 years - less than
5 years
|
8 weeks |
12/15 weeks |
5 years - less than
6 years
|
10 weeks
|
14/17.5 weeks |
| a)
6 years
and less than 7 years (Federal) OR
(b) 6 years
and over (NSW)
|
11 weeks
|
16/20 weeks |
7 years - less than
8 years
|
13 weeks
|
(no further increase)
|
8 years - less than
9 years
|
14 weeks
|
|
9 years- less than
10 years
|
16 weeks
|
|
10 years and over
|
12 weeks
(to reflect
availability of pro rata long service leave)
|
|
|
|
|
Notes:
(1) Where the employer has
less than 15 employees, the federal award redundancy severance pay
provision was abolished from December 2005 under the federal
government's new employment laws.
(2) The NSW
provisions do not apply where the employer has fewer than 15
employees –
see Employment Protection Act 1982
(NSW).
The 'Community Standard' for redundancy
payments:
Prior to March 2004, the
"community standard"
for redundancy payments was as in the table below, although many
certified agreements are
significantly higher:
| length of employment |
minimum redundancy pay |
| Not more than 1 year |
nil |
| 1 year up to 2 years |
4 weeks pay |
| 2 years up to 3 years |
6 weeks pay |
| 3 years up to 4 years |
7 weeks pay |
| over 4 years |
8 weeks pay |
Insolvent or bankrupt employers
If an employer goes broke,
the Commonwealth Government provides a safety net of minimum payments
but only at the "community standard". Follow the link here for more information on the Australian
Government web
site about the GEERS scheme.
If an employee is made redundant, accumulated
entitlements must be paid out in addition to the above - ie,
accrued annual leave, long service leave (if the employee is eligible).
Casual employees do not receive redundancy / severance payments.
Note: different amounts apply in the building
industry: email us for
details.
We can assist you
For a small fee - as
little as $44 - Working Today can help you to
understand your specific situation. Click here for our online response form,
or write us a letter at PO Box 207 Fitzroy Victoria 3065.
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