Voluntary Redundancy and Workers Compensation

Your Rights and Responsibilities

Presented By Owen Hodge Lawyers

Overview

• Introduction

• Redundancy Obligations

• Risk of an Unfair Dismissal Claim

• Voluntary Redundancy as a Solution

• Workers Compensation Obligations

• Who is Covered by Workers Compensation

• When Two World Collide

• Get the Help From Us

INTRODUCTION

Employers have important obligations to employees when the employee’s job is

abolished or when an employee is unable to continue to work because of a

workplace injury. In NSW, the Fair Work Act 2009 generally requires notice and

redundancy payments in the former situation. Modern awards or enterprise

agreements may also require an employer to consult with an employee about the

redundancy.

To address the risk of workplace injury, on the other hand, employers are required

to maintain appropriate workers compensation insurance, ensure that the workplace

is safe and deal with injuries appropriately. Redundancy and Workers Compensation

obligations generally proceed along separate tracks but may intersect in complicated

ways when a worker who on Workers Compensation is later made redundant or one

anticipating redundancy claims a workplace injury.

REDUNDANCY

OBLIGATIONS

Redundancy pay obligations do not apply to small

employers who employ fewer than 15 employees,

although notice obligations generally do.

For employers over that threshold, notice and pay

requirements are triggered when an employee’s

job is abolished because the task is simply no

longer required or as a result of workplace

restructure, where tasks are reassigned and

fewer workers are necessary.

They are not triggered when a worker:

1. is discharged for poor performance or conduct

2. is offered other employment within the

business or is transferred to a new employer

3. resigns

4. has been employed for less than a year or

5. is a casual worker or temporary worker who

has completed the assignment.

The amount of notice an employer must give

depends on the employee’s length of service and

ranges from one week for less than a year’s

employment to four weeks for more than five

years of employment.

Employees over the age of 45 with at least two

years of service must be given an additional

week’s notice.

Redundancy pay is similarly calculated on the

basis of length of service and ranges from four

additional weeks for employees with between one

and two years of service to twelve weeks for

those with at least ten years of service.

The employee must also be compensated for

unpaid wages and any accrued leave

entitlements.

RISK OF AN UNFAIR

DISMISSAL CLAIM

The risk for employers is that an employee may

claim that the termination is not a genuine

redundancy, but an unfair dismissal.

The law governing unfair dismissals gives the

employee certain rights up to and including

reinstatement.

Under the Fair Work Act, unfair dismissal

proceedings must be begun in Fair Work Australia

within 14 days of the last day of employment.

For many employers, an offer of voluntary

redundancy is the safest method in avoiding an

action for unfair dismissal or discrimination in a

difficult redundancy situation.

VOLUNTARY

REDUNDANCY AS A

SOLUTION

Employers may choose to accomplish a reduction

in staff by offering a voluntary redundancy

package as an incentive to individuals within the

relevant job classification.

This should be implemented carefully to avoid the

loss of only the most valuable workers who feel

confident of their ability to find new positions

elsewhere.

One solution is to ask all relevant employees to

re-apply for the remaining positions and to offer

redundancy packages to those not re-hired, in a

so-called “spill-and-fill” strategy.

WORKERS

COMPENSATION

OBLIGATIONS

Employers in NSW, (other than those who pay $7500 or less

in annual wages, do not employ apprentices or trainees and

are not a member of a group for premium purposes) must

maintain Workers Compensation insurance.

Premiums are calculated on the basis of payroll, business

activities and workplace safety experience, among other

factors.

When an employee is injured, an employer has an obligation

to:

• attend to the employee as soon as possible, ensuring

they receive medical treatment if required,

• notify the insurer within 48 hours,

• complete the register of injuries as soon as possible,

• work with the insurer to develop an injury management

plan for the injured worker,

• implement and monitor a return to work plan for the

injured worker and

• retain the injured worker for a period of at least six

months following the injury.

Once a notification of injury form is completed an employer

must forward it to the insurer within five days of receipt in

order to have the excess waived and submit relevant medical

certificates as soon as possible.

WHO IS COVERED BY

WORKERS

COMPENSATION

Most, but not all, employees of non-exempt

employers are covered for Workers Compensation.

The exceptions include volunteers and certain

contractors under labour-hire service arrangements.

The contractor exceptions are determined on a

case-by-case basis. If you are uncertain whether a

worker is covered, you should seek professional

advice, as failure to include a worker can have

serious legal consequences.

You should also ensure that proper information has

been submitted to your insurer so that premium

payments are calculated correctly. Undercounting

workers or under reporting payroll can have similarly

serious consequences.

WHEN TWO WORLDS

COLLIDE

What if you have concluded, on the basis of evidence, that a worker who is out on workers compensation is actually able to

return to work, but refuses to do so. Can you terminate his or her employment for reasons of conduct?

What if a worker is unable to work because of a workplace injury and, for unrelated reasons, it becomes necessary to

downsize your business? Can you make him redundant or offer a voluntary redundancy package within the six-month

period following the injury?

This is genuinely perilous territory for an employer both in terms of potential legal liability and with respect to impact on the

insurance premium. Determinations of these issues are very fact specific, so you should work closely with both your

insurance agent and your business attorney to avoid unintended repercussions.

GET THE HELP FROM

US

ABOUT US - OWEN HODGE LAWYERS

Owen Hodge commenced providing legal services to the St George and Sutherland communities in 1951. Since then the firm has

grown considerably, developing a reputation for quality legal services, value for money and a strong commitment. Today, Owen

Hodge Lawyers provide expert legal services to a diverse range of individual and commercial clients across the Sydney metropolitan

and surrounding areas with offices in Sydney and Hurstville.

We work to ensure that an experience with our firm is as positive as possible. Our objective is to be a leader amongst our peers by

offering:

• Expertise in services offered and superior service delivery

• Constant improvement of human resource policies and practices

• Constant technology improvement and development

• Convenient office locations

We have a team of experienced personal injury lawyers who have ample experience in resolving voluntary redundancy and Workers

Compensation issues and would be eager to help you evaluate your options and to choose the best course of action. Call us today

at 1800 770 780 for a free consultation.

www.owenhodge.com.au