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Redundancy rights and entitlements during COVID-19
Job loss4 min read

Redundancy rights and entitlements during COVID-19

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Your position being made redundant can feel overwhelming if you don’t know where you stand legally – especially given all that’s happening during the COVID-19 pandemic.

We asked Alexandra Targett, Lawyer at McDonald Murholme to explain employee rights and entitlements when it comes to redundancy, to help you work out where you stand if you’re facing this situation.

What are reasons for a redundancy?

There are a few reasons your position may become redundant. Your employer may determine that your role is no longer required, or the business may become insolvent or bankrupt, Targett says.

“Businesses may also need to make a position redundant if they are suffering from low sales or are undergoing a restructure, forcing them to cut down on jobs,” she adds.

Redundancies aren’t considered genuine from a legal perspective if an employer could have, in reasonable circumstances, redeployed the employee into a suitable position within their business or an associated entity. In this situation you may be able to file an unfair dismissal claim against the organisation.

Do I get a say in my position being made redundant?

“Employers are not required to consult employees about redundancy unless the obligation arises in a modern award or enterprise agreement that applies to their employment,” Targett says.

She says if there’s an obligation to consult about redundancy, your employer must comply with this obligation for the redundancy to be genuine.

“Consultation should take place before an irreversible decision has been made by the employer,” Targett explains. “The employee should be afforded the opportunity to influence the decision and provide feedback and input regarding the redundancy.”

How much notice do employers have to provide?

Employers must provide the minimum notice period outlined in the National Employment Standards – how long this is for you will depend on how long you’ve been with the company.

“If you have been working for your employer for one year or less, you are entitled to a minimum of one week’s notice,” Targett says.

“The most you could attain under the National Employment Standards is four weeks’ notice if you’ve been employed with them for more than five years. The exception is employees over 45 years of age who have completed at least two years of employment – this entitles you to an additional week of notice.”

How much of a redundancy payout am I entitled to?

To be entitled to a redundancy payout under the National Employment Standards, Targett says you must have been working with your employer on an ongoing basis for at least 12 months.

The amount payable is calculated at your base rate for ordinary hours worked, which Targett says generally excludes any loadings, overtime rates, monetary allowances or other separately identifiable amounts. The total amount is based on your length of continuous service with the employer.

“For example, if you have been employed for at least one year, but less than two, then the minimum redundancy pay is four weeks’ salary. Employees with a length of service of at least nine years but less than 10 are entitled to a minimum of 16 weeks’ redundancy pay,” she says.

The Fair Work website has a handy calculator where you can work out how many weeks’ redundancy pay you’re entitled to by answering a few questions about your employment. It can also tell you how much notice your employer should give you.

Targett says small businesses – those that employ fewer than 15 people – may not be required to make a redundancy payment. This will depend on the industry the organisation operates in, and any modern award or enterprise agreement governing its operations.

Likewise, casuals, independent contractors, trainees and apprentices are generally not entitled to receive a redundancy payment.

Could the COVID-19 pandemic affect my redundancy pay?

“An employer may apply to the Fair Work Commission for an exemption from paying the full redundancy entitlement due to financial hardship. The Commission then has the discretion to reduce an employee’s redundancy pay to an amount that it considers appropriate (which may be nil),” Targett says.

“We have recently seen two Fair Work Commission decisions in this area in response to the COVID-19 pandemic.”

“On 9 April 2020, the Fair Work Commission held that a small carpentry business was eligible to reduce an employee’s redundancy pay, as it was satisfied that the business was under significant financial strain due to the current crisis” she says.

“The above decision may be contrasted to a different decision from the same day. In this case, the Fair Work Commission concluded that a manufacturing company had the current financial means to pay the full redundancy entitlement to its employees, despite the business entering a period of economic uncertainty and declining sales due to COVID-19,” Targett says.

It’s worth noting that your employer must provide notice of termination (or payment in lieu of notice) even if your redundancy pay has been lawfully reduced by the Fair Work Commission.

What legal options do I have for challenging a redundancy?

If you want to challenge your redundancy, you may be eligible to bring an application to the Fair Work Commission under unfair dismissal or general protections laws.

There are key differences between these two types of claims, so you should seek independent legal advice to determine which claim better suits your situation.

An unfair dismissal claim may be more appropriate if your redundancy was not genuine, but a general protections claim may be more suitable if you were selected for redundancy for an unlawful reason (such as discrimination).

If you’ve been made redundant during the COVID-19 pandemic, your redundancy may still be considered unfair or unlawful if your employer failed to comply with the Fair Work Act 2009 (Cth).

You have just 21 days from the date your dismissal takes effect to file an unfair dismissal or general protections application with the Fair Work Commission, so it’s wise to seek professional advice as soon as you can to help you make an informed decision.

Information provided in this article is general only and it does not constitute legal advice and should not be relied upon as such. SEEK provides no warranty as to its accuracy, reliability or completeness. Before taking any course of action related to this article you should make your own inquiries and seek independent advice (including the appropriate legal advice) on whether it is suitable for your circumstances.

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