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The NES establishes a minimum termination notice period which all employers must comply with
Under the NES, you need to provide at least the following notice period (or pay the employee in lieu):
Period of continuous service | Notice |
1 year or less | 1 week |
More than 1 year – 3 years | 2 weeks |
More than 3 year – 5 years | 3 weeks |
More than 5 year | 4 weeks |
An employee must give you notice of their resignation, with a notice period in accordance with the table above. There is no requirement for an employee to give additional notice based on their age.
If an employee does not provide the required notice period, you may be able to withhold an amount no more than one week’s wages from their final pay.
A daily hire employee is only required to provide one day’s notice of termination (or one day’s pay will be paid or forfeited).
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.
The Award contains an industry specific redundancy scheme, which is unique to the building and construction industry. This applies instead of any redundancy obligations under the NES.
Under clause 41 of the Award, redundancy is defined as “a situation where an employee ceases to be employed by an employer to whom this award applies, other than for reasons of misconduct or refusal of duty”.
This definition of redundancy has a far wider reach than its ordinary meaning. The industry specific redundancy scheme can include any situation where an employee is no longer employed by the employer. This may include a situation where:
An employee will not be eligible for a redundancy payment if:
Noting the above eligibility criteria, an employee engaged for less than 12 months may still be entitled to a redundancy payment equal to 1.75 hours per week of service.
Yes. Apprentice employees will accumulate credit towards the payment of a redundancy benefit. However, the redundancy benefit is only payable if the employee completes the apprenticeship and remains employed for a further 12 months.
No – any period of service as a casual should not be counted when working out redundancy pay.
How much do I have to pay?
The amount of redundancy pay will depend on your employee’s length of service.
Length of Service | Redundancy Payment |
Less than 12 months | 1.75 hours pay per week of service |
1 year but less than 2 years | 2.4 weeks’ pay plus, for time worked in excess of 1 years, 1.75 hours pay per completed week of service up to a maximum of 4.8 weeks’ pay |
2 years but less than 3 years | 4.8 weeks’ pay plus, for time worked in excess of 2 years, 1.6 hours pay per completed week of service up to a maximum of 7 weeks’ pay |
3 years but less than 4 years | 7 weeks’ pay plus, for all service in excess of 3 years, 0.73 hours pay per completed week of service up to a maximum of 8 weeks’ pay |
More than 4 years | 8 weeks’ pay |
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 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 the 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.
Yes, under the Award there is no exception for small business employers.
You must still provide the applicable notice and redundancy pay. You also need to ensure that you adopt a just and reasonable process; otherwise, you may risk an unfair dismissal claim.
It is recommended that guidance is sought before taking steps to terminate an employee.
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