There are some small business employers who are not exempted from providing redundancy pay when they make an employee redundant. For example, some modern awards require certain small business employers to pay redundancy to their employees.
Other modern awards preserve redundancy pay entitlements in pre-modern awards (NAPSAs and Division 2B State awards) that exceed the NES entitlement for a transitional period until 31 December 2014. This includes situations where the relevant pre-modern award gave employees of a small business an entitlement to redundancy pay.
Small business employers should carefully check their requirements in relation to redundancy pay and seek professional advice if unsure of your obligations.
Pre-modern award entitlements to redundancy
Prior to the commencement of modern awards, some pre-modern awards (NAPSAs and Division 2B awards) provided redundancy pay for employees of a small business. This mainly occurred in the state of South Australia.
Most modern awards now contain transitional provisions which will preserve the small business redundancy entitlements from a NAPSA or Division 2B State award until 31 December 2014, if they provide for redundancy pay in excess of an employee’s entitlement under the NES.
Where a small business employer is covered by a modern award which contains this transitional provision and the employer would have had an obligation to pay redundancy pay under a NAPSA or a Division 2B State award, then the employee will continue to be entitled to redundancy pay in accordance with the NAPSA or Division 2B State award if it provides an entitlement that exceeds the employee’s entitlement under the NES.
Modern award entitlements to redundancy
Some modern awards require certain small business employers to pay redundancy to their employees. These redundancy obligations apply in industries where historically there was no small business redundancy exemption.
The following are some examples of modern awards which require certain small business employers to pay redundancy pay:
Redundancy pay obligations in an agreement or contract of employment
An applicable agreement or contract of employment may also provide for a more favourable redundancy pay entitlement than the NES, including by extending this entitlement to employees of a small business employer.