An employee covered by the Building and Construction General On-Site Award 2010 (Building and Construction Award) has different redundancy entitlements to other employees.
Key differences:
- redundancy has a much broader definition and applies in surprising circumstances;
- the amount of redundancy pay is calculated differently;
- an employee who has been employed less than 12 months is entitled to redundancy pay.
This article compares some of the key features of redundancy under the Building and Construction Award to the National Employment Standards (NES).
Redundancy – Building and Construction Award
Meaning
Under the Building and Construction Award, redundancy means a situation where an employee ceases to be employed by an employer to whom this award applies other than for reasons of misconduct or refusal of duty.
For an employee (other than a casual employee), this could extend to an employee’s resignation.
Amount of redundancy pay – Building and Construction Award
| Period of service | Base redundancy pay | Plus |
| Less than 12 months (only if redundancy is instigated by the employer) | 1.75 hours per week of service | |
| 1 year or more, but less than 2 years | 2.4 weeks pay
| For all service in excess of 1 year, 1.75 hours pay per completed week (up to a maximum of 4.8 weeks pay) |
| 2 years or more, but less than 3 years | 4.8 weeks pay | For all service in excess of 2 years, 1.6 hours pay per completed week (up to a maximum of 7 weeks pay) |
| 3 years or more but less than 4 years | 7 weeks pay | For all service in excess of 3 years, 0.73 hours pay per completed week (up to a maximum of 8 weeks pay) |
| 4 years or more | 8 week’s pay |
|
Weeks pay
To work out a week’s pay, the ordinary time hourly rate (at the time of termination) needs to be multiplied by 38.
Employee’s death
The amount of redundancy pay needs to be paid to the estate of the employee.
Casual employee excluded
A casual employee is not entitled to redundancy benefits as the casual loading compensates for a range of things, including redundancy.
Redundancy pay schemes
An employer may offset an employee’s redundancy pay entitlement by contributed to a redundancy pay scheme
Redundancy – National Employment Standards (NES)
When redundancy pay is payable
Under the NES, an employee is entitled to redundancy pay if the employee’s employment is terminated at the initiative of the employer because the employer no longer requires the job done by the employee to be done by anyone or because of the employer’s insolvency or bankruptcy.
The amount of redundancy pay is determined by a number of factors including:
- size of the employer – a small business employer is exempt from having to pay redundancy pay;
- length of continuous service – if an employee has been employed for less than 12 months no redundancy pay is payable to the employee;
- modern award or enterprise agreement – some awards (like the Building and Construction Award) modify the standard redundancy arrangements;
- fixed term employees – are not entitled to redundancy pay at the end of their term;
- serious misconduct – redundancy pay does not apply to an employee who is dismissed for serious misconduct;
- true casual employees – are not entitled to redundancy pay;
- apprentices – who complete their apprenticeship are not entitled to redundancy pay.
Amount of redundancy pay (NES)
The amount of redundancy pay based on length of continuous service is:
| Period of continuous service | Redundancy |
| At least 1 year but less than 2 years | 4 weeks |
| At least 2 years but less than 3 years | 6 weeks |
| At least 3 years but less than 4 years | 7 weeks |
| At least 4 years but less than 5 years | 8 weeks |
| At least 5 years but less than 6 years | 10 weeks |
| At least 6 years but less than 7 years | 11 weeks |
| At least 7 years but less than 8 years | 13 weeks |
| At least 8 years but less than 9 years | 14 weeks |
| At least 9 years but less than 10 years | 16 weeks |
| At least 10 years | 12 weeks |
Take away
There are many factors to consider in a redundancy situation. Employers need to understand their obligations, the process to follow and the payments they are required to make. Employees need to understand their rights.
We assist employers and employees with all aspects of employment, including redundancy. Speak with us today!
