In this special Workplace Bulletin:
- Redundancy – Do you know what the new laws will mean for you?
- 5 things you need to know about the new redundancy laws
- Find out your new severance payment and notice obligations
Dear Reader,
It’s been all over the news…the global financial crisis is causing Australian businesses to have a good hard look at its workforce and redundancies are on the rise. But did you know that the federal government’s Fair Work Bill will impose new requirements on employers in regards to redundancy and retrenchment from 1 July 2009?
As an employer, you want to ensure that you comply with the law and keep out of court when dealing with redundancy. But did you know that if you retrench an employee next year you might have to pay them as much as 21 weeks’ severance pay? Are you ready to do this?
There are many other things changing as well…
Previously, WorkChoices exempted you from unfair dismissal in redundancy cases. Well that’s all set to change, because from 1 July 2009 this year, an employee you retrenched will be able to bring an unfair dismissal claim against you in certain circumstances. How? They can do so if it was reasonable for you to offer them another job (either in your business or a related business) and you failed to do so. In circumstances such as these, they will be able to sue you for up to 6 months’ pay.
Also, from 1 January 2010, you will not be able to retrench a group of employees suddenly without notice. Instead, you must first discuss options for redeployment or retraining with redundant award covered employees. If you do not do this, you could be sued.
But wait, there are still more changes you need to be aware of!
5 more things you need to know about the new redundancy laws
1. Do you have a workforce of 15 or more staff?
If you employ 15 or more staff from 1 January 2010 you will have to pay retrenched employees minimum notice and redundancy pay – from your CEO down to your line manager. (Please see the section entitled ‘Your new severance payment and notice obligations’ at the end of this bulletin for more information on what your specific notice and severance payment obligations will be.)
2. Do you have a workforce of less than 15 staff?
If you employ less than 15 staff, from 1 January next year you will have to pay the same amount of severance to retrenched award-based employees as larger employers. However, their redundancy pay will be capped at 8 weeks.
3. Who will be able to make the decision to retrench an employee?
The decision to retrench an employee is no longer yours alone to make. You will need to discuss ways to avoid retrenchment with the employee and – if the employee insists – their representative, before making the decision to retrench them. In cases where it is likely that a significant number of award-based employees will become redundant, you will need to supply each employee (and their representative) with written information prior to your meeting with them. This information will need to explain things such as the reasons for the likely redundancies, timeframes, etc. Future Employment Law Practical Handbook updates will give you templates and guidelines to assist you with this process.
4. What new powers will Fair Work Australia have in regards to redundancy?
We know about the risk of unfair dismissal claims after the retrenchment. However, award-based employees who don’t like the way you are handling the redundancy will be able to refer their dispute to the government’s new industrial tribunal – Fair Work Australia. And Fair Work Australia will have more powers to intervene in the dispute before the retrenchment. (Remember, future Employment Law Practical Handbook updates will give you templates and guidelines to help you deal with these circumstances).
5. Do you know what you MUST now do before an employee can be terminated?
You will now only be able to terminate an employee by delivering them a written notice that clearly states what their last day of employment will be.
Here are some other things you might not know…
- Your redundant employees may be entitled to ‘interview leave’!If an award applies to a redundant employee serving notice, the employee will be entitled to one day’s paid ‘interview leave’ for each week of notice. However, you will be able to insist that they make a statutory declaration to prove they attended the interview.
- Redundant employees serving notice may leave their employment at any timeIf an award applies to a redundant employee serving notice, they can leave their employment at any time prior to their termination date without losing their redundancy pay entitlements. But remember, in this case you will not need to pay them for the notice they did not serve.
- You must take certain steps before retrenching 15 or more employeesIf you are retrenching 15 or more employees you need to complete a particular form and fax it to Julia Gillard’s Department (the DEEWR) – but only until 1 July 2009.
What are your new severance payment and notice obligations?
Use this table to check your new severance payment and notice obligations.
| Length of service employee had with you | Your notice obligation | Your redundancy pay obligation |
| Less than one year | 1 week | Nil |
| At least 1 year but less than 2 years | 2 weeks | 4 weeks |
| At least 2 years but less than 3 years | 2 weeks (3 weeks if the employee is over 45) | 6 weeks |
| At least 3 years but less than 4 years | 3 weeks (4 weeks if the employee is over 45) | 7 weeks |
| At least 4 years but less than 5 years | 3 weeks (4 weeks if the employee is over 45) | 8 weeks |
| At least 5 years but less than 6 years | 4 weeks (5 weeks if the employee is over 45) | 10 weeks |
| At least 6 years but less than 7 years | 4 weeks (5 weeks if the employee is over 45) | 11 weeks |
| At least 7 years but less than 8 years | 4 weeks (5 weeks if the employee is over 45) | 13 weeks |
| At least 8 years but less than 9 years | 4 weeks (5 weeks if the employee is over 45) | 14 weeks |
| At least 9 years but less than 10 years | 4 weeks (5 weeks if the employee is over 45) | 16 weeks |
| At least 10 years | 4 weeks (5 weeks if the employee is over 45) | 12 weeks |
Things certainly are changing… but remember, future Employment Law Practical Handbook updates will ensure that you are fully equipped to deal with redundancy in your workplace.
Until next time…
Charles Power
Tags: fair work australia, fair work bill, Redundancy, retrenchment, workplace
