Redundancy

From 1 January 2010, the National Employment Standards (NES) replaced the non pay rate provisions of the Australian Fair Pay and Conditions Standard (the Standard).
Under the National Employment Standards (NES) redundancy occurs when your employer decides they no longer your job to be done by anyone and terminates your employment (except in cases of ordinary and customary turnover of labour) or your employer becomes insolvent or bankrupt.

Redundancy may happen when:

• Your job is replaced by new technology (i.e. it can be done by a machine)
• Business slows due to lower sales or production
• The business relocates
• A merger or takeover occurs
and/or
• The business restructures or reorganises.

Redundancy pay

The amount of redundancy pay under the NES equals the total amount payable to the employee for the redundancy pay period. This is worked out using the table below, at the employee’s ‘base rate of pay’ for his or her ordinary hours of work.

An employee’s base rate of pay (other than a pieceworker) is the rate of pay payable to an employee for his or her ordinary hours of work, but not including any of the following:

• Incentive-based payments and bonuses
• Loadings
• Monetary allowances
• Overtime or penalty rates
• Any other separately identifiable amounts

Following is the Fair Work table by which your rate of redundancy pay is calculated:

Employee’s period of continuous service with employer or termination
At least but less than Redundancy pay period
1 year 2 years 4 weeks
2 years 3 years 6 weeks
3 years 4 years 7 weeks
4 years 5 years 8 weeks
5 years 6 years 10 weeks
6 years 7 years 11 weeks
7 years 8 years 13 weeks
8 years 9 years 14 weeks
9 years 10 years 16 weeks
10 years - 12 weeks

Note: long service leave entitlements provide the rationale for reducing the redundancy pay entitlement for employees who have a period of 10 years’ continuous service or greater.

It is possible for an employer to apply to Fair Work Australia for a determination reducing their liability to pay redundancy pay to a specified amount (that may be nil), if Fair Work Australia considers appropriate. The employer may apply for the determination if an employee is entitled to redundancy pay and the employer finds other acceptable employment or cannot pay the amount.

The base rate of pay for a pieceworker may be specified in the applicable modern award or enterprise agreement. Otherwise it is determined by the following formula:

• Total amount earned by the pieceworker in the previous 12 months*
• Total hours worked by the pieceworker in the previous 12 months*
• or period continuously employed if less than 12 months.

Source: Fair Work Ombudsman: http://www.fairwork.gov.au/termination/redundancy/pages/how-much-redundancy-pay.aspx