CCI’s Employee Relations Advice Centre (ERAC) has reported an upward trend in calls from Members over the past fortnight about terminations and redundancy.
To help businesses take the correct steps and avoid possible unfair dismissal applications, we’ve provided answers to some commonly asked questions.
Does time worked during a period of notice of termination count towards continuous service when calculating redundancy payments?
Generally, yes. Where employees work out a notice period, then the time worked will count as continuous service for the purpose of calculating redundancy pay. However, there is an exception where an employee has served less than 12 months continuous service at the time that notice of termination was given to them.
Where this is the case, the time worked during a notice period does not count towards service for the purposes of calculating redundancy pay. Where employers opt to pay an employee notice in lieu of their work during that period, only time actually worked will count for the purpose of calculating redundancy pay.
Does annual leave and personal leave accrue on notice paid in lieu?
No. Annual leave and personal leave accrued based on ordinary hours of work during a period of ‘service’ with the employer. Where notice is paid in lieu, service ceases at the time of employment termination.
Does authorised unpaid time off work (such as unpaid parental leave) count towards service when calculating payment in lieu of notice or redundancy pay?
Yes. In the case of payment in lieu of notice, authorised unpaid periods will count toward service. However, in the case of calculating redundancy pay, unpaid periods off work will not count towards service. Exceptions include unpaid community service leave or periods of stand down as authorised in a binding enterprise agreement or contract of employment.
For example, where an employee has taken 12 months of unpaid maternity leave during their employment, this will reduce their period of service by 12 months for the purpose of calculating redundancy pay payable under the National Employment Standards. However, it will not affect the notice entitlement.
Does an employee forfeit their entitlement to redundancy pay if they have been asked to work out a notice period and they resign part way through?
This will depend in part on the industrial instrument that covers the employee. If they are bound by an award or agreement that allows the employee to resign during a notice period with their redundancy pay remaining intact, then they will not forfeit this entitlement.
However, if there is no industrial instrument that provides the employee with this entitlement, any resignation by the employee prior to the communicated termination date will see the employee forfeit their entitlement to redundancy pay.
If I offer an employee who is being made redundant another role, do I have to pay redundancy pay if they turn down the role?
Generally, where the employment terminates at the initiative of the employer because they no longer require the job to be done by anyone, this will qualify the employee to receive redundancy pay. Notwithstanding this, there are a number of express exemptions under the Fair Work Act 2009. Where an alternative role is offered, there is scope for employers to apply to the Fair Work Commission to have the amount of redundancy pay payable reduced.
Note that the above information is only applicable to National industrial relations system employers. Members who are uncertain of their status in this regard are encouraged to contact CCI’s Employee Relations Advice Centre team for assistance.
► Need more information or templates on managing the termination process? Purchase CCI’s Recruitment and Termination Guide now.