In the wake of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, a number of major banks are undertaking restructures. Westpac has published a plan to simplify its structure, shifting its BT Financial group into its consumer and business divisions and selling parts of its advice sector. Further, the private wealth, superannuation, and platforms and investments businesses will be absorbed into an expanded business division, whilst the insurance business will move into the consumer division. Similarly, at Commonwealth Bank, ANZ and NAB, moves are being made to separate their wealth management arms (including services such as mortgage broking, insurance and financial planning) in a bid to resolve conflicts of interest.
This article is the second in a two part series. ‘Banking Royal Commission Guide – Part 1: Changes Due To Restructure‘ deals with possible scenarios employees may face in the event of a restructure, including what to look out for when faced with redundancies or a change of duties. This segment, Part 2, looks at what rights and entitlements are available to employees that have been made redundant.
Employees whose positions have become redundant are entitled to redundancy pay based on how long they have served in a continuous period with their employer. The amount is calculated in accordance with the employee’s base rate of pay for ordinary hours worked, with no allowances for incentive based payment, bonuses, loadings, monetary allowances, overtime or penalty rates. The table below sets out the amount payable according to an employee’s continuous period of service.
|Period of continuous service||Redundancy pay|
|At least 1 year but less than 2 years||4 weeks|
|At least 2 years but less than 3 years||6 weeks|
|At least 3 years but less than 4 years||7 weeks|
|At least 4 years but less than 5 years||8 weeks|
|At least 5 years but less than 6 years||10 weeks|
|At least 6 years but less than 7 years||11 weeks|
|At least 7 years but less than 8 years||13 weeks|
|At least 8 years but less than 9 years||14 weeks|
|At least 9 years but less than 10 years||16 weeks|
|At least 10 years||12 weeks|
However, redundancy pay does not necessarily apply to all employees. Types of employees that will not receive redundancy pay include:
- Employees whose period of continuous service with the employer is less than 12 months;
- Employees specifically employed for a particular period of time, a particular task or a particular season;
- Employees of small businesses (a business with fewer than 15 employees).
Employers may also be able to apply for an exemption or reduction in redundancy pay where they have provided the employee with ‘other acceptable employment’ under the Fair Work Act. What constitutes ‘other acceptable employment’ will be assessed according to the particular circumstances of a case, though factors likely to be relevant will be how similar the work, pay and level of seniority are to the original role held by the employee.
There may also be provisions relevant to the calculation of redundancy pay and entitlements in an award or enterprise agreement that you are covered under.
Award covered employees and redundancies
As discussed earlier, employers are required to comply with the relevant awards or enterprise agreements when undertaking a redundancy. Often employment contracts will include information regarding whether an employee is covered under an award or enterprise agreement.
Awards that may apply to employees in the banking and finance industry include:
- Banking, Finance and Insurance Award 2010
- Clerks – Private Sector Award 2010
Obligations upon employers under these awards include:
- Redundancy pay under the National Employment Standards
- Where an employee is transferred to a lower paid position by reason of the redundancy, the same period of notice as if employment was terminated must be given.
- An employee made redundant may terminate their employment during the period of notice. They will then still be entitled to the benefits and payments they would have received had they remained in employment until expiry of the notice, but are not entitled to payment instead of notice.
- An employee made redundant must be allowed one day’s time off without loss of pay during each week of notice for the purpose of seeking other employment.
- If the employee has been allowed paid leave for more than one day during the notice period for the purpose of seeking other employment, the employee must, at the request of the employer, produce proof of attendance at an interview or they will not be entitled to payment for the time absent.
Additionally, all modern awards and enterprise agreements will contain an obligation for the employer to consult about redundancy.
For employees classed as high income employees, modern awards will not apply, although enterprise agreements may still be applicable. The high income threshold at the time of writing is currently $145,400.
If you are an employee who is unsure about which awards and agreements you are covered under, you should either consult your employer or contact JFMLAW for advice. You can also find out more about awards and agreements on the Fair Work website: https://www.fairwork.gov.au/awards-and-agreements.
Whether you are an employer thinking about restructuring your business or an employee whose position has become redundant following the Banking Royal Commission, the team at JFMLAW can provide expert advice and assistance tailored to your needs.
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