Termination and Redundancy – Building and Construction General On-site Award 2010 (NAT)

From 1 January 2010 the Building and Construction General On-site Award (Modern Award) applies to all employers who are constitutional corporations (Pty Ltd companies) and to all employers in Victoria, the ACT and the Northern Territory who engage on-site construction workers.

From 1 January 2011, the Modern Award will also apply to sole traders and partnerships in Queensland, NSW, South Australia and Tasmania.

Below is a summary of the provisions in the Modern Award relating to termination of employment and redundancy.

What notice of termination must I give my employee?

You must comply with the notice of termination provisions in the National Employment Standards (NES). Under the NES you need to provide at least the following notice period (or pay the employee in lieu):

If the employee is over 45 years old and has completed at least 2 years of continuous service with you, this notice period must be increased by 1 week.

What notice of termination must my employee give?

The notice your employee must give you is the same as the notice period an employer must provide in the above table, except there is no requirement for an employee to give additional notice based on age.

Exception for daily hire employees

The notice periods described above do not apply to a daily hire employee working in the building and construction industry. For a daily hire employee, only one day’s notice of termination of employment needs to be given on either side (or one day’s pay will be paid or forfeited).

Job search entitlement

Where you have given your employee notice of termination, you must give your employee up to one day’s time off without loss of pay to look for another job. The time off is to be taken at a time convenient to both you and the employee.

When do I need to give my employee ‘redundancy pay’?

The Modern award contains an industry specific redundancy scheme which applies in place of the redundancy entitlements in the NES (see HIA’s Information Sheet, ‘The National Employment Standards’).

While most people understand that redundancy occurs where an employee is put off as a result of a lack of work or restructuring,under the Modern Award, redundancy has a much broader meaning. In fact, it may include any termination except for misconduct or refusal of duty.

This means that redundancy pay will be payable in a broader range of circumstances, including resignation by an employee in some circumstances.

Do you have to pay redundancy if your employee works for less than 12 months?

Yes, unless employment is terminated for misconduct, refusing to work or resignation.

Is redundancy payable if your employee works for more than 12 months?

Yes, unless the employment is terminated for misconduct or refusing to work.  You are required to make a redundancy payment even if your employee resigns.

How much do you have to pay?

The amount of redundancy pay will depend on your employee’s length of service.

Can time served as an apprentice count when working out redundancy pay?

If you employ an apprentice the employee accumulates credit towards an entitlement to redundancy pay if the apprenticeship is completed and the employee remains with you for a further 12 months

Can time served as a casual count when working out redundancy pay?

No – any period of service as a casual should not be counted when working out redundancy paid.

What if I have been making payments into a redundancy pay scheme?

You may offset these payments against the redundancy pay entitlement.

Where an employee receives a benefit from a redundancy pay scheme, you only need to pay the difference between the redundancy pay (calculated in accordance with the above table) and the benefit received. If the benefit received from the redundancy pay scheme is greater than the Modern Award entitlement you will not have to pay anything.

The employee will generally be entitled to the greater of the fund benefit or the award benefit but not both. Even if employee does not receive a benefit from a redundancy pay scheme (when compared to the award), any payments that you have made into the scheme can be offset from the award entitlement.

What if I am terminating an employee for performance related issues (that are not misconduct or refusal of duty)?

You must still provide the applicable notice and redundancy pay. You also need to ensure that you adopt a fair process otherwise you may risk an unfair dismissal claim (see HIA’s Information Sheet ‘Unfair Dismissal’). It is recommended that guidance is sought before taking steps to terminate an employee.

For more information, call an HIA Workplace Adviser on 1300 650 620

_{DISCLAIMER – the above is intended to provide general information in summary form. The contents do not constitute specific advice and should not be relied upon as such. Formal specific advice should be sought by members with respect to particular matters before taking action.}