Redundancy pay — full-time to part-time in course of employment

Analysis

Redundancy pay — full-time to part-time in course of employment

Employees commonly move from full-time positions to part-time positions in the course of working for an employer, and this can create an issue as to the appropriate payment when an employee in this situation is made redundant.

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Employees commonly move from full-time positions to part-time positions in the course of working for an employer, and this can create an issue as to the appropriate payment when an employee in this situation is made redundant.
 
This question was recently sent to WorkplaceInfo.
 
We have an employee who has completed more than eight years of service with the company.
 
The first five years of service was full-time employment, however, the employee has been employed part-time for approximately three and a half years.
 
We are unsure on a couple of issues related to redundancy pay.
 
Is the employee entitled to 14 weeks of redundancy pay (as per the National Employment Standard) or pro rata based on the period of part-time employment; and, is the employee paid at the current rate of pay (part-time) or an average over a specified period of time?
 
The entitlement to a number of weeks of redundancy pay is determined by the employee’s continuous service with the employer.
 
Changing from full-time to part-time employment (or vice versa) does not affect the employee’s period of continuous service.
 
In this case, the employee would be entitled to 14 weeks rof edundancy pay because the employee has completed more than eight years of continuous service with the employer.
 
Rate of pay
 
In determining a ‘week’s pay’ for the purposes of redundancy pay, the NES states that the amount of redundancy pay is calculated on the employee’s base rate of pay for his or her ordinary hours of work.
 
The Fair Work Act 2009 defines ‘base rate of pay’ to mean the rate for the employee’s ordinary hours of work, but not including incentive-based payments and bonuses, loadings, monetary allowances, overtime or penalty rates, and any other separately identifiable amounts.
 
The ‘ordinary hours of work’ are the employee’s part-time weekly hours at the time of redundancy. This means the weekly rate of pay represents the employee’s current ordinary weekly part-time base rate of pay.
 
Likewise, if the employee had transferred from part-time to full-time employment, the 14 weeks of redundancy pay would be paid at the employee’s ordinary full-time weekly base rate of pay.
 
Source: Paul Munro, IR Consultant.
 
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