Redundancy from employment may occur as a result of economic, market, business restructuring, technological changes or when the employer becomes insolvent or bankrupt. The cessation of employment is not related to poor performance or misconduct of an employee.

All employees who have been employed for more than a year are entitled to get compensation for redundancy as per the Fair Work Act 2009 (FWA). However, for senior or executive employees, issues arise. If you’re seeking executive redundancy entitlements and compensation, it’s key you speak to an experienced employment lawyer to determine what your executive employment rights are.

executive redundancy

Executive Redundancy & The Fair Work Act

In the Fair Work Act 2009, there is an unfair dismissal threshold. This threshold restricts senior executives earning high salaries and pay packages from claiming for unfair dismissal. For those who have a salary of $153,600 (as of July 2020), an unfair dismissal does not fall within the jurisdiction of the Fair Work Compensation Act.

While the salary cap is revised regularly, it definitely restricts the application of the Fair Work Act.

Executive Redundancy: 4 Factors to Consider

1. Is it a Genuine Redundancy?

An executive needs to ascertain whether his termination is due to redundancy or not.

If it is reasonable for an employee to be redeployed within the employer’s business or relocated to an associated business, it is not a genuine redundancy. It is then a case of an unfair dismissal and the employee is entitled to hire an unfair dismissal lawyer to get appropriate compensation. It will be sensible to monitor online and print advertisements to check if the employer is advertising the claimed ‘redundant’ job position.

2. Notice & Severance Pay Are Not The Same

In Australia, the Court will imply a term of reasonable notice into a contract of employment when there is no explicit term or clause.

However, the Courts will not imply a term of severance payment (intended as compensation for the loss of future entitlements to long service leave and accrued sick leave) into a contract of employment.

Before signing any contract, it is highly recommended you consult a commercial lawyer if you are concerned.

3. Wrongful Termination Put Forward as Redundancy

An employer may seek to portray the wrongful termination of an executive as a “redundancy”. However, it will always imply that the employment contract is being terminated at the initiative of the employer. In such a case, the executive will have a common law claim against the employer even if there is no legal claim to a severance payment.

4. Employer Bankruptcy or Insolvency

In the event of bankruptcy or insolvency of the employer, a claim for financial assistance can be made to the government funded General Employee Entitlements and Redundancy Scheme.

General Employee Entitlements and Redundancy Scheme may pay unpaid wages, unpaid annual leave, unpaid long service leave, money in lieu of notice and redundancy entitlement.

Speak to Experienced Employment Lawyers About Your Executive Redundancy

If you believe you are entitled to executive redundancy payments or compensation, talk to our team at Owen Hodge Lawyers. We can walk you through your rights and help you determine if you are facing an unfair dismissal or redundancy. Our employment and redundancy lawyers can also answer any questions you have about employment contracts and awards, executive severance payments and redundancy in Australia.

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