This Bill addresses an anomaly in the Fair Work Act to better protect the rights to redundancy payments for employees in large businesses that become insolvent.
What the Bill does
The small business redundancy exemption is a longstanding feature of the workplace relations framework. It encourages employment by small businesses by relieving them of redundancy pay obligations, which can be a significant contingent cost of employing staff. To qualify for the exemption, businesses must employ fewer than 15 staff.
Current laws provide a loophole where large businesses downsize to small businesses due to insolvency. As businesses wind down, it can be common for them to fall below the 15-employee threshold and to technically become a small business employer before the final few staff are made redundant.
Often, these final employees are the ones who stay on to assist in the orderly wind-up of the business. They should not lose their entitlement to a redundancy payment - it was not what the exemption was intended to cover.
Therefore, this Bill would provide an exception to the operation of the small business redundancy exemption in these downsizing contexts, preserving these employees’ rights to a redundancy payment.
To provide feedback on the Bill, please use the survey via this link.
Full copy of the Bill:
A full copy of the draft Bill can be found here.