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Redundancy / severance pay |
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Before any definite decision is made regarding redundancy within an organisation, the employer must consider the Consultation and Dispute Resolution – clauses 8 and 9 - provisions of the LDO Award.
If a dismissal is a genuine redundancy it will not be an unfair dismissal. Under Commonwealth workplace laws, a person’s dismissal is a 'genuine redundancy' if:
- your employer no longer needs the person’s job to be done by anyone because of changes in the operational requirements of the business, and
- your employer followed any consultation requirements in the modern award, enterprise agreement or other industrial instrument that applies.
In addition to the requisite period of notice (or pay in lieu) of an employer instigated termination of employment, the NES (at sections 119 to 123 of the FW Act) stipulates that where the decision to terminate is because –
- the employer no longer requires the subject employee’s job to be done by anyone, or
- because of the insolvency or bankruptcy of the employer,
an amount of redundancy pay is also to be paid to an employee. The amount of redundancy pay is established on a scale according to the period of continuous service of the employee.
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Employee’s period of continuous service with the employer on termination
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Redundancy pay period
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At least 1 year but less than 2 years
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4 weeks
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At least 2 years but less than 3 years
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6 weeks
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At least 3 years but less than 4 years
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7 weeks
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At least 4 years but less than 5 years
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8 weeks
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At least 5 years but less than 6 years
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10 weeks
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At least 6 years but less than 7 years
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11 weeks
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At least 7 years but less than 8 years
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13 weeks
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At least 8 years but less than 9 years
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14 weeks
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At least 9 years but less than 10 years
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16 weeks
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At least 10 years
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12 weeks
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Redundancy pay is paid at the employees ‘base rate of pay’ for ordinary hours of work which does not include:
- Loadings;
- Overtime or penalty rates;
- Allowances;
- Bonuses or incentive based payments.
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