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Do I need to make redundancy pay if my employee resigns?


Under the National Employment Standards (NES) you do not need to make redundancy pay when your employee resigns. However, an award may provide industry specific redundancy scheme requiring the redundancy pay to be made out to the employee regardless of who ended the employment.

If you are a building and construction company, you and your worker may be covered by the Building and Construction General On-site Award 2020 (the Onsite Award). Clause 41 of the Onsite Award provides industry specific redundancy scheme that requires an employer to pay a redundant employee redundancy pay calculated in accordance with the redundancy pay clause in the Onsite Award. The Onsite Award defines redundancy as a situation where an employee ceases to be employed by an employer other than for reasons of misconduct or refusal of duty, and redundant has a corresponding meaning. This means, if the Onsite Award applies, you will need to pay your employees redundancy pay as per the Onsite Award regardless of who ended the employment except where the employee was dismissed due to misconduct or refusal of duty.

It is also important to ensure that the redundancy is genuine and that the consultation requirements are followed. You can read our article, Ensure requirements of genuine redundancy are met, which provides more information on what is a genuine redundancy.

Need assistance to navigate through your obligations under the industrial relations laws? Please reach out to the MBA Workplace Relations and Legal Team on 02 6175 5900.