|
May
2004
Improved
benefits for retrenched employees
Employees
on Federal Awards are set to receive improved redundancy entitlements.
Nick Blake outlines what they are.
The ACTU has won improved compensation for people who are retrenched
or made redundant, with the Australian Industrial Relations Commission
(AIRC) recently increasing the benefits for redundant employees
covered by federal awards.
In an important test case brought by the ACTU, the AIRC has awarded
severance pay for up to 16 weeks pay for ten years' service.
In its landmark decision, the AIRC observed that the existing
payments did not fully compensate the losses sustained by employees
who were made redundant after more than four years of service
because the maximum entitlements were reached at four years of
service. It also noted that various aspects of hardship, in particular
the loss and trauma associated with termination, the loss of
seniority, and the loss of accrued entitlements such as sick
leave and long service leave, continued to increase after four
years of service.
The AIRC therefore extended the severance pay scale from four
years to ten years of service, with increases in the amount of
severance pay for each year of service up to ten years.
Employees with more than 10 years' service have their severance
pay capped at 12 weeks because they are entitled to pro rata
long service leave, and the AIRC said it would be 'double counting
not to make an allowance for that'.
The AIRC decision also partially removes the small business exception
from severance payments. Previously employers with less than
15 employees were not required to pay severance payments but
the exemption has changed, with small employers now having to
pay employees up to eight weeks' pay after four years' service.
Unfortunately the AIRC refused to extend the redundancy provisions
to casual employees, claiming the loadings paid to casual employees
were designed to compensate the effects of redundancy.
As the decision represents a test case, all federal awards may
be varied on application to include the new standards.
However, in a disturbing development that could undermines the
AIRC, the federal government has since indicated it will attempt
to rescind the decision. It appears the government is not prepared
to accept the independent assessment of the AIRC which made the
decision after hearing extensive evidence both for and against
improving the entitlements.
The
AIRC has established the following severance pay scale for employees
with four to ten years service:
|
Period
of continuous service |
Period
of continuous service |
|
Less
than 1 year |
Nil |
|
1
year and less than 2 years |
4
weeks' pay |
|
2
years and less than 3 years |
6
weeks' pay |
|
3
years and less than 4 years |
7
weeks' pay |
|
4
years and less than 5 years |
8
weeks' pay |
|
5
years and less than 6 years |
10
weeks' pay |
|
6
years and less than 7 years |
11
weeks' pay |
|
7
years and less than 8 years |
13
weeks' pay |
|
8
years and less than 9 years |
14
weeks' pay |
|
9
years and less than 10 years |
16
weeks' pay |
|
10
years and over |
12
weeks' pay |
|
|
