As a general rule, a small business employer is not required to pay redundancy pay, as set out in the National Employment Standards however there are some circumstances where you may be legally required to make these payments.
A “small business employer” is defined under the Fair Work Act as an employer who employs fewer than 15 employees at the time of the redundancy. This includes all employees you employee, the employee who is being dismissed, and any other employee who is being dismissed or terminated.
A casual employee is not to be counted unless they are employed on a regular and systematic basis.
Notwithstanding the National Employment Standards, you may still be obliged to pay redundancy because of the specific terms of a modern award or an enterprise agreement. Examples of modern awards which prescribe redundancy pay for small business employers includes the Joinery and Building Trades Award, Timber Industry Award, Manufacturing and Associated Industries and Occupations Award.
In such circumstances the scale of redundancy pay is usually less than that prescribed by the National Employment Standards.
There are also other employees who are not entitled to redundancy payment, whether they are employed by a small or large business in the following circumstances:
- an employee with less than 12 months continuous service;
- a casual employee;
- an employee who is terminated because of serious misconduct;
- the employee is employed for a specific task or for a specified period of time or season and is terminated at the completion of the task or time period;
- a training arrangement that applies for a specific period of time; and
- the employee is an apprentice.
The bottom line is that the majority of small business employers are exempt from paying redundancy pay however there are certain modern awards where a small business employer is required to pay an employee redundancy pay.
At Everingham Solomons we have the expertise and skills to help you with all of your business’s legal needs and requirements, because Helping You is Our Business.
Click here for more information on Terry Robinson