Redundancy Obligations

The Trustee has received legal advice that redundancy obligations apply to all employers and employees covered by the following modernised awards, which came into effect on the 1 January 2010.

The awards being;

  • The Building and Construction General On-Site Award 2010 and
  • The Plumbing and Fire Sprinklers Award 2010.

Prior to the introduction of the above awards, the terms relating to redundancy applied to a narrower definition. It covered termination of employment that was:

(a) At the initiative of the employer and on the grounds of operational requirements, or

(b) Because the employer is insolvent.

The redundancy provisions in these modernised awards bring a return to an entitlement for employees that apply in situations where the employee ceases to be employed for reasons other than misconduct or refusal of duty.

Consequently, the redundancy provisions in these modernised awards replace the redundancy provisions under Subdivision B-Redundancy Pay of Division 11 of the ‘National Employment Standards’ (NES), in respect to the definition of redundancy, benefit payable and the exemption of employers who employ less than 15 employees.

In fundamental terms, this means that any employer covered by the provisions of the above awards as at 1 January 2010 will need to make provision for redundancy benefits regardless of the number of employees engaged. Basically these ‘modern’ awards replicate the redundancy scales found under the National Building and Construction Industry Award 2000. That is, a maximum of 8 weeks pay after 4 years employment.

The choice by employers is whether to fund this minimum obligation monthly into ACIRT or accrue internally until the employee is made redundant.

How Does this Affect Employers?

It depends on your circumstances. If your company has a registered Industrial instrument, the redundancy obligations are defined. If your company does not have a registered industrial agreement it nevertheless has a redundancy obligation from the 1 January 2010. It should be noted that these awards do not distinguish between ‘small’ or other employers in regard to the liability to pay redundancy.