But do I HAVE to (make redundancy payments)?

Sing it with me, Bob Dylan: the times they are a changin’.

For one reason or another, your business is undergoing significant operational changes and you need to make some of your workforce redundant.

So, who do you make redundant, how do you do it properly and, most importantly, what do you have to pay them?

1. Who you make redundant will depend on the reasons for the redundancy, as well as the size of your business and the nature of the restructure.
2. The proper process and procedure to be followed will depend on the terms of the employment contract and/or applicable modern award or enterprise bargaining agreement. 
3. Generally, you will not have to pay an employee redundancy pay in the following situations:

1. The employee was employed on a casual or fixed-term contract;
2. The employee has only been employed for less than 12 months; or
3. The employee was an independent contractor.

There are some exceptions to this rule and then some exceptions to those exceptions.

Also, those exceptions are not the only exceptions.

Put simply, redundancy can be incredibly complicated.

Get it right and get the experts to talk you through it.

Penalties of up to $54,000 for corporations and $10,800 apply to directors for breaching their redundancy obligations under the Fair Work Act 2009 (Cth) so it pays to pay up! (Though only when you have to, of course.)

Call the Workplace Relations team at Nevett Ford on (03) 9614 7111 and we’ll make it look easy. 

 

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Redundant one day and offered alternate employment the next equals no redundancy pay

DRW Investments Pty Ltd v Richards [2016] FWC 461 is a decision in which a large transport company having lost a major hauling contract found work for affected drivers with the new contractor.


The affected drivers argued that they had been made redundant by their old employer entitling them to redundancy payments but the old employer disagreed.


Commissioner Sams found that the drivers had resigned from their old employer to take up work with the new employer. As a result their employment had not been terminated at the initiative of the old employer so as to bring into operation section 119 of the Fair Work Act.


Commissioner Sams also commented that redundancy pay was for a specific beneficial purpose and not meant as a windfall where employees, whilst being made redundant one day are offered and accept suitable alternative employment the next day.

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