Small Business Redundancy Considerations
We recently had an enquiry from a small business employer who unfortunately had to let an employee go. They are in the events industry and had a large contract that was due to take place in February 2021 which had been delayed as a result of Covid until at least October 2021 and may not proceed at all.
With the employee only being engaged with the business for 6 months, the question was asked of us what entitlements would need to be paid, what process would need to be followed and what risks might be present for the business. We thought that this would be a good opportunity to share this scenario and some of our considerations to our broader audience so that they can apply these to their own situations.
Please see below for a full transcript of this video
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Transcript
We recently had an enquiry from a small business employer who unfortunately had to let an employee go. They are in the events industry and had a large contract that was due to take place in February 2021 which had been delayed as a result of Covid until at least October 2021 and may not proceed at all.
With the employee only being engaged with the business for 6 months, the question was asked of us what entitlements would need to be paid, what process would need to be followed and what risks might be present for the business.
We thought that this would be a good opportunity to share this scenario and some of our considerations to our broader audience so that they can apply these to their own situations or of course if you want to discuss your specific circumstances, please do not hesitate to reach out to us by visiting ondemandhr.com.au
Firstly, as the termination was not related to the conduct or performance of the employee, the termination was in effect a redundancy. As the business had less than 15 employees, they were classified as a small business and because the employee had only 6 months of service, there was no need to make any redundancy payments to the employee.
Therefore, outside of any remaining annual leave balance, the employer was only obligated to provide one weeks payment in lieu of notice in accordance with the provisions of the National Employment Standards.
In terms of process and risk, we advised the employer that despite the absence of unfair dismissal risk, that they should still follow a robust redundancy process. There was no risk as employees are ineligible to claim for unfair dismissal compensation if they have been employed with a small business employer with less than 15 employees for a period of less than 12 months.
In terms of a robust redundancy process, along with many other useful videos in the HR & workplace relations space we have broken this down in several other videos available on our website at ondemandhr.com.au.
Click on the HR News Tab and search for redundancy and you will find it there.
We hope that you found this client story valuable and if so, please let us know in the comments below.
Looking forward to seeing you in the next update.
