Redundancy pay — when more beneficial entitlement than NES

Q&A

Redundancy pay — when more beneficial entitlement than NES

Some industrial instruments contain more beneficial redundancy provisions than the National Employment Standards that are due to commence on 1 January 2010. The question arises: if an employee’s position becomes redundant after 1 January 2010, does the employee receive payment calculated on the redundancy pay scale under the NES or the more beneficial entitlement under, for example, a NSW NAPSA?

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Some industrial instruments contain more beneficial redundancy provisions than the National Employment Standards (NES) that are due to commence on 1 January 2010. The question arises: if an employee’s position becomes redundant after 1 January 2010, does the employee receive payment calculated on the redundancy pay scale under the NES or the more beneficial entitlement under, for example, a NSW NAPSA?
 
This question was recently posed to WorkplaceInfo.
 
We have a number of employees covered under a NSW clerical NAPSA who will be covered by the Clerks — Private Sector Award 2010 from 1 January 2010. The company employs approximately 75 employees.
 
The NSW NAPSA provides a scale of redundancy payments up to a maximum of 20 weeks redundancy pay for an employee with six years or more continuous service with the employer and who is 45 years of age and over. Also, the NSW NAPSA also provides a more beneficial definition of a week’s pay for redundancy pay (also includes shift penalties and allowances).
 
However, the modern clerical award refers to the scale of redundancy pay provided under the NES , meaning an employee with six years continuous service is only entitled to 11 weeks of redundancy pay, at their base rate of pay (which excludes shift penalties and allowances).
 
If a clerical employee’s position becomes redundant after 1 January 2010, does the employee receive payment calculated on the redundancy pay scale under the NES or the more beneficial entitlement under the NSW NAPSA?
 
Most modern awards contain a transitional provision that continues to recognise redundancy pay provisions in a NAPSA that are more beneficial to the employee than the NES.
 
For example, Clause 14.5 of the new Clerks — Private Sector Award 2010 states that an employee whose employment is terminated by the employer is entitled to redundancy pay in accordance with the terms of a NAPSA that would have entitled an employee to redundancy pay in excess of the entitlement under the NES.
 
If the company terminates an employee on or after 1 January 2010 who has completed six years or more continuous service and is 45 years of age or more, the employee would be entitled to 20 weeks of redundancy pay as per the NSW NAPSA.
 
Note: 31 December 2014
 
This access to a greater entitlement to redundancy pay will continue to apply to an eligible employee who was covered by this NSW NAPSA until 31 December 2014.
 
Lesser benefit under NAPSA
 
The redundancy pay scale under the NES will prevail over a NAPSA that provides a lesser entitlement to redundancy pay.
 
Source: Paul Munro, IR Consultant. 
 
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