The current economic climate and changing project demands in civil construction have led to changes in some of our members’ businesses regarding work requirements. Due to this, some employees’ roles are having to be made redundant.
To make an employee redundant it is important that it be a “genuine redundancy” especially for legal purposes. A genuine redundancy means that the employer no longer needs an employee’s job to be performed by anyone due to operational changes, and they have followed all required consultation processes. It is also important to consider if there are any reasonable redeployment opportunities within the business before making the employee redundant. A genuine redundancy will be subject to more favourable tax treatment on the termination payment and means an employee cannot claim unfair dismissal.
What are the payments for a redundancy?
This depends on the employee’s position and whether the employee is employed under a contract (covered by the National Employment Standards – NES) or in accordance with an Award, such as the Building and Construction General On-site Award 2020. Payment entitlements will be different depending on these factors.
The Building and Construction General On-site Award 2020 (the Award) sets out an Industry Specific Redundancy Scheme, which differs from the general NES.
Clause 41.3 of the Award sets out the following payment provisions for employees’ redundancy:
Period of Continuous service with the employer
Redundancy/severance pay
Less than 12 months
1.75 hours per week of service
1 year but less than 2 years
2.4 weeks’ pay for all service in excess of 1 year
+ 1.75 hours per week of service up to maximum of 4.8 weeks’ pay
2 years but less than 3 years
4.8 weeks’ pay for service in excess of 2 years
+ 1.6 hours pay per week up to a maximum of 7 weeks’ pay
3 years but less than 4 years
7 weeks’ pay for service in excess of 3 years
+ 0.73 hours pay per week up to a maximum of 8 weeks’ pay
4 years or more
8 weeks’ pay
Employees will also be entitled to the relevant notice period, including an additional week if an employee is 45 years or over, and to any accrued annual leave or long service leave (if eligible).
We understand that this can be complex and result in difficult discussions with employees.
Please contact us on 9009 4000 for further support.