Home - When you can avoid redundancy pay and when you can’t …

UpdatesJul 01, 2015

When you can avoid redundancy pay and when you can’t …

It’s a long road to a fair and lawful redundancy process.

By Joseph Nunweek

It’s a long road to a fair and lawful redundancy process.

In previous Workplace Bulletins, I’ve talked about the hurdles small businesses face in having to set up a fair and effective procedure for selecting employees to retrench, and ensuring that each of those employees gets their say.

But when you get to the point when employees are actually notified of their redundancy, you’ve got to do right by them one more time.

Specifically, you need to make sure they receive their full redundancy pay entitlements, in accordance with the National Employment Standards (NES), a modern award or enterprise agreement that covers your employees, or an employment contract or workplace policy.

Then there’s the matter of sorting out the rest of their final pay – and getting the tax right on top of it.

When you can avoid redundancy pay

It’s no wonder that some employers want to know when they’ll be exempt from redundancy pay obligations.

And believe it or not, there’s a few occasions when you can do so, including:

The Fair Work Act also says you can pay less redundancy pay, or none at all, if you can “obtain other acceptable employment for the employee”.

So is it time for you to hop on Seek and start finding new jobs for them, or start coaching them through job interviews?

Not exactly – read on to learn about a recent case which makes it pretty clear when the Court will be convinced you found new roles for employees yourself.

Federal Court: Security company didn’t do enough to obtain new employment

In FBIS International Protective Services (Aust) Pty Ltd v Maritime Union of Australia [2015] FCAFC 90, a security company (FBIS) was trying to apply for a redundancy pay waiver under the Fair Work Act.

In October 2013, it lost the tender to provide security services to Asciano for its stevedoring facilities. Another security company, ACG, won the tender.

49 employees who had lost their jobs with FBIS when it lost the tender accepted new employment with ACG instead. Remember, this was a failed bid for a tender — not one business selling out to another. So ACG didn’t recognise the employees’ previous service with FBIS.

The Federal Court took a good, long look at what “obtains acceptable employment” meant in the context of the Fair Work Act.

It found that FBIS’s role was limited to providing the contact details of its employees to ACG — who, naturally, would have been on the lookout for experienced employees with knowledge of the Asciano sites.

While FBIS gave its employees a chance to enter a recruitment process with ACG, this wasn’t the same as getting them a guaranteed offer of employment.

So in that case, what would constitute obtaining new employment? A good example might be finding employee a new job with a long-standing business connection or associate. You as the employer would be the active force in creating the new business opportunity.

This could be easier said than done in practice. Whether or not you actively set out to find new work for an employee is down to you, and your needs.

But remember — you need to apply to the Fair Work Commission if you want to vary an employee’s redundancy pay. You can’t get away with just making a call on it yourself — so don’t!

Today’s the day for wage changes

Last month, I wrote to you about the changes to the minimum wage the new financial year would bring. Time flies when you’re having fun, but it also flies when you’re busy — and we’re already at July 1.

So, remember that from today:

With all these changes, we decided it was high time to update our Wages Guide. It’s released next week — and I’ll be telling you more about it in the coming days.

Until next time,

Joseph Nunweek

Editor, Workplace Bulletin


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