Restructuring and redundancies can be challenging for a small business. It is important small business employers are aware and comply with all legal obligations or they may be in breach of the Fair Work Act 2009 (Cth) (The Act) and at risk of an underpayment claim.
Under the National Employment Standards (NES), employees are not entitled to a redundancy if they have less than 12 months service, engaged for a specified period, engaged for a particular task, project or for a season, terminated for serious misconduct, a casual employee, a trainee engaged for the duration of the training agreement or an apprentice.
Most small businesses do not have to pay redundancy pay when making an employee redundant, however some may be required to depending on their industry Award or Enterprise Agreement.
The Act defines a small business employer as an employer who employs less than 15 employees at a particular time. To determine this, count all employees employed at the time of the redundancy including the employee being terminated, regular and systematic casual employees and employees of associated entities.
It is also important to note that from 15 December 2023 there was a change to the small business redundancy rules. If an employer becomes a small business as a result of liquidation and this occurred on or after 15 December 2023, employees are entitled to redundancy pay under the NES.
Need immediate support?
If you are a small business and you need some advice on restructuring your business and your legal obligations, South Australian Business Chamber members can call the Business Advice Hotline on (08) 8300 0000 (select option 1).
