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  1. #1
    HeyPete is offline Member
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    Default Full-time to part-time redundancy pay entitlement?

    Hey all.

    Can anybody shed some light on redundancy calculations for an employee who is currently working part-time, but has previously worked full-time for 95% of their employment?

    Scenario:

    1. Employee is a full-time employee
    2. Employee takes 12 months Parental leave
    3. Employee returns to part-time position
    4. Part-time position is made redundant shortly after


    Will they be paid Redundancy based on part-time hours or their 'average hours' during their time with the company?

  2. #2
    Moz
    Moz is offline Senior Member
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    Quote Originally Posted by HeyPete View Post
    Will they be paid Redundancy based on part-time hours or their 'average hours' during their time with the company?
    What do you think ?

  3. #3
    HeyPete is offline Member
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    I was hoping to get a bit more than "What do you think?"

    If I knew, I would have opened the thread with my idea... of which I have none to answer your question.

  4. #4
    Moz
    Moz is offline Senior Member
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    Quote Originally Posted by HeyPete View Post
    I was hoping to get a bit more than "What do you think?"

    If I knew, I would have opened the thread with my idea... of which I have none to answer your question.
    I don't think it's an unreasonable question.

    I don't know for sure, but I could take an educated guess. That is that minimum redundancy pay requirements are based on "years" of full time service, so if a person's tenure with an employer includes some part time work then this should be converted to the equivalent full time work, for the purposes of calculating redundancy payments (and long service leave).

    So if they work 50% of normal hours, then two years of part time work equals one year of full time work.

    I would be surprised if this is incorrect, but you never know with our ever changing employment laws

    Bear in mind that if a portion of the parental leave was paid, then that probably counts towards the "years of service" total.

    Here are the minimum redundancy payments as laid down in the NES How much redundancy pay? - Redundancy - Termination - Fair Work Ombudsman

  5. #5
    Tiger is offline Senior Member
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    The redundancy pay you calculate is based on the current working hours of the employee i.e. if part time at the time the job was made redundant then that is what stands. This applies to both the notice (if paying this out) and the severance components of the pay out.

    In calculating the Long Service Leave component however (if employee has been there five or more years ie in NSW - I'm not sure which state you are in and LSL is different in just about every state), you do not take into account the 12 months unpaid parental leave in calculating the length of service - if this was leave without pay/unpaid then it is not counted in calculating LSL. You do however need to calculate any LSL entitlement based on the actual employment status. ie work out how long the employee was full time and how long part time. If you are unclear about LSL entitlements in your state, go online - there is indepth information on various states' LSL - there are also LSL calculators on line which can assist you.

    Other things to consider:
    1. Was there a redundancy clause in the amended employment contract you would have issued to this employee at the time she returned from P/L and began working part time. If so, then you need to be sure you are following that.

    2. Company culture: ie if your company is a small, perhaps family owned org and this employee is a long serving member of your workforce? If so, sometimes, in these types of orgs, they elect to be more generous and that is acceptable - as long as you honor your minimum obligations. Just be careful however that you don't set a precedent here by giving this person a more favourable pay out than say someone else in your workforce.

    Hope this helps

  6. #6
    HeyPete is offline Member
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    Quote Originally Posted by Tiger View Post
    The redundancy pay you calculate is based on the current working hours of the employee i.e. if part time at the time the job was made redundant then that is what stands. This applies to both the notice (if paying this out) and the severance components of the pay out.
    It does help thanks. I have a problem with it though.

    It leaves returning parents quite vulnerable to wiley employers, who can take full advantage of this. Instead of paying a full redundancy package, bring the employee back on part time (say 2 days a week), and then make the position redundant.

  7. #7
    Cottoneyes is offline Senior Member
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    If the employee requested to move to the part time, and this can be shown that they initiated the request, than I think you would be fine.

    If the employer initiated it in any way, then there could be an issue and the full time hours may need to be looked at

  8. #8
    DAS
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    Given the circumstances of the short time as P/T I'm not sure why the organisation isn't paying redundancy at the full time rate for the whole period. Better that the emplotyee goes with sugar on the tongue than salt.

  9. #9
    Moz
    Moz is offline Senior Member
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    Isn't it the "rate" of pay that is used to calculate the redundancy payout?

    Whether a person is part time or full time the "rate" of pay may be the same.

    If in doubt ask the FWA. They will make determinations on individual redundancy payments and this can be requested by an employer.

  10. #10
    HeyPete is offline Member
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    Quote Originally Posted by Moz View Post
    Isn't it the "rate" of pay that is used to calculate the redundancy payout?

    Whether a person is part time or full time the "rate" of pay may be the same.
    It's the employees base rate of pay for hir or her ordinary hours of work.

    If you are working 40 hrs per week, you get 'x' number of weeks * 40hrs @ your base rate of pay.

    Similarly, if you only work 16 hrs per week, you get 'x' number of weeks * 16hrs @ your rate of pay.

    I'm sure there is some case law somewhere about this topic.


    Quote Originally Posted by Moz View Post
    If in doubt ask the FWA. They will make determinations on individual redundancy payments and this can be requested by an employer.
    Thanks... I didn't know you could do this.

  11. #11
    Moz
    Moz is offline Senior Member
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    Quote Originally Posted by HeyPete View Post
    Similarly, if you only work 16 hrs per week, you get 'x' number of weeks * 16hrs @ your rate of pay.
    Wow, that's really unfair. So you can have worked 10 years full time, then change to part time for whatever reason, say working 30% of full time hours, then get made redundant a month later and receive only 30% of the redundancy pay that you would have received had you been made redundant a month earlier.

    That stinks.

    Re case law on sites like Workplaceinfo - bear in mind that case law that pre dates the FWA and NES may no longer be relevant.

  12. #12
    Moz
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    Not believing that the legislation could be so unfair I decided to call the FWA about this myself, to be absolutely sure, and I can confirm that Tiger's advice is spot on (yeah I know, Doubting Thomas )

    A person may have worked for many years full time for the organisation, but it's their weekly earnings at the time of being made redundant that is used to calculate the payout. Unless they are working under an award or workplace agreement which is more beneficial.

  13. #13
    HeyPete is offline Member
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    Crazy!

    Thanks all.

  14. #14
    hrprofessional is offline Registered Member
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    Just a cautionary note to employers.

    If an employer was to ask an employee to change from full time to part time, and the employee agreed and was then made redundant within a short time frame, the employee could make the following arguments;

    - The employer breached a clause in a modern award or enterprise agreement as the employer failed to consult in regards to a 'major workplace change' (case law shows that even one redundancy is a 'major workplace change'). Once the employer has made a 'definite decision' in regards to the 'major workplace change' they must consult. (if you're unsure what this is please see this example from the Clerks Private Sector Award 2010 clause 8.)

    - The employee is entitled to a redundancy payment calculated on the full time hours.

    Regards,
    HR Professional
    www.hrprofessional.com.au

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