Redundancy pay for employees in the building and construction industry, even when they resign

By 26 April 2022Workplace
redundancy pay

Permanent employees covered by Building and Construction General On-site Award 2020 are entitled to redundancy pay whenever they cease to be employed unless they are dismissed for misconduct or for refusal of duty. This means that employees are entitled to redundancy pay, even if they resign.

The Award contains the following industry-specific redundancy scheme:

41. Industry-specific redundancy scheme

41.1 The following redundancy clause for the on-site building, engineering and civil construction industry (as defined) is an industry-specific redundancy scheme as defined in section 12 of the Act. In accordance with section 123(4)(b) of the Act, the provisions of Subdivision B—Redundancy pay of Division 11 of the NES do not apply to employers and employees covered by this award.

41.2 Definition

For the purposes of clause 41, 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. Redundant has a corresponding meaning.

This is a very different entitlement to usual redundancy pay. The effect of the clause is that the term “redundancy” has a much broader definition than usual.

In Kuredale Pty Ltd v Fair Work Ombudsman [2021] FCCA 332 the Court confirmed that a resignation would fall within the definition of redundancy and that the exception for “refusal of duty” did not apply to situations where an employee resigned.

The rationale for this broader entitlement is that employees in the building and construction industry frequently move jobs and will rarely be employed long enough to be entitled to redundancy payments in usual circumstances.

Key Takeaways

If your employees are covered by the Building and Construction General On-site Award 2020, unless an employee is terminated for serious misconduct or for refusal of duty, you will be required to pay redundancy pay. A failure to pay redundancy pay may result in expensive underpayment claims, including penalties for failing to comply with the Award.

If you require support in managing such claims or advice on managing terminations or resignations, please do not hesitate to contact our Toowoomba Employment Lawyer Suzanne Wishart at Murdoch Family Lawyers on 1300 068 736.

 

This publication has been carefully prepared, but it has been written in brief and general terms and should be viewed as broad guidance only. It does not purport to be comprehensive or to render advice. No one should rely on the information contained in this publication without first obtaining professional advice relevant to their own specific situation.

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