Termination and Redundancy

How much notice do I need to give an employee if I am terminating their employment?

An employee, other than a casual employee, is entitled to at least the minimum amount of notice set out in the National Employment Standards ( NES‚ π), which is based on years of continuous service with the employer. If the employee has a more generous entitlement through an agreement or contract of employment, they are entitled to the more generous amount.
Under the NES the minimum notice is as follows:

Years of service Week’s notice
Less than 1 1
1 to 3 2
3 to 5 3
More than 5 4

 

If an employee is over 45 and has completed at least 2 years of continuous service at the end of the day the notice is given, they are entitled to 1 week in addition to what they are entitled to above.

Notice can either be given or payment can be made in lieu.

If I make an employee redundant do you need to give them notice as well redundancy pay?

Yes. If you are terminating an employee’s employment due to redundancy, you are required to give notice, or make payment in lieu, in addition to any redundancy pay they may be entitled to.

Do I have to inform the employee in writing that their employment is being terminated?

Yes. The NES requires that an employee is given written notice of the date of their termination, which cannot be later than the date notice is given. The written notice can be given to the employee personally, left at the employee’s last known address or sent by pre-paid post to the employee’s last known address. Fresh HR Insights can assist clients in drafting letters giving notice of termination.

 

How much redundancy pay do I need to pay an employee whose position has been made redundant?The NES set out the minimum amount of how much redundancy pay is required based on years of continuous service, as set out in the table below.Years of service How Many Week’s of Redundancy Pay1 to 2 4

2 to 3 6

3 to 4 7

4 to 5 8

5 to 6 10

6 to 7 11

7 to 8 13

8 to 9 14

9 to 10 16

At least 10 12

However, some employees may be entitled to less than what is set out above and some may be entitled to more. If an employee had no entitlement to redundancy prior to the commencement of the NES on 1 January 2010, then their period of continuous service only runs from that date. For example, if the employee commenced employment on 1 Jan 2006, and had no entitlement to redundancy pay until the NES came into effect on 1 Jan 2011, and the employee was made redundant on 1 Feb 2011, under the NES they would be entitled to 4 weeks’ redundancy pay as they have at least one year of service, but less than 2 years of service.

There are some exclusions from the obligation to pay redundancy where the employer is a small business (less than 15 employees), or where the employee was a trainee or apprentice ceasing work at the end of the apprenticeship or traineeship, or in certain transfer of business situations, employers should always seek advice about an employee’s entitlements prior to them being made redundant.

How to make an employee redundant – It is important that you follow a strict process when making an employee redundant and ensure there is a genuine case for redundancy, otherwise you may be liable for unfair dismissal. Fresh HR Insights is able to provide specific advice on redundancy processes.

Please note that the information contained above is of a general nature and does not constitute advice of any form. Advice on the specific circumstances of any particular case should always be sought before taking any action. If you need any advice, or for any other enquiry please contact us.