Redundancy — the NES and award/agreement-free employees

Q&A

Redundancy — the NES and award/agreement-free employees

The National Employment Standards (NES) that commence on 1 January apply to all employees of national system employers; and one element of the NES relates to redundancy, so all ‘national system’ employees will be entitled to redundancy benefits.

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The National Employment Standards (NES) that commence on 1 January apply to all employees of national system employers; and one element of the NES relates to redundancy, so all ‘national system’ employees will be entitled to redundancy benefits.
 
This issue was raised in a recent inquiry to WorkplaceInfo.
 
Our company employs a number of employees who are considered to be award/agreement-free and understand these employees will be covered by the redundancy pay provisions under the NES, provided the employer employs 15 employees or more.
 
We have never had a company policy that provides redundancy pay to our award/agreement-free employees.
 
The position of one of our award/agreement-free employee’s may become redundant in the early part of 2010.
 
The employee would have been employed by the company for over five years at the date of termination of employment.
 
Because the NES commences from 1 January 2010, is an award/agreement-free employee entitled to redundancy pay calculated only on service from this date, which would mean no entitlement to redundancy pay until at least January 2011?
 
The NES recognises an employee’s service with the employer prior to its introduction, provided the terms of an employee’s contract of employment included an entitlement to redundancy pay. Where an employee’s contract of employment does not include an entitlement to redundancy pay, service for the purposes of the redundancy provisions under the NES for an award/agreement-free employee will commence from 1 January 2010. 
 
Service would be based on the total period of employment with the employer, although any period of unauthorised absence, a period of unpaid leave or authorised unpaid leave does not count as service for the purposes of calculating redundancy.
 
A period of casual employment with the employer does not count as service nor does a casual employee have an entitlement to redundancy pay under the NES.
 
Details on redundancy, Fair Work provisions and modern awards are available on WorkplaceInfo
 
Source: Paul Munro, IR Consultant.
 
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