Circular 2010/1: Engagement of redundancy benefit recipients

Last updated: 21 Apr 2010

This page is: archived

Clauses 4.4 and 4.4A of the Public Service Commissioner’s Directions 1999 (the Directions) set out certain restrictions on the employment in the Australian Public Service (APS) of persons who have received a redundancy benefit from an APS agency or from the Australian Parliamentary Service. 

2. These provisions have been amended to:

  • reduce the redundancy benefit (or restriction) period by an amount equal to an employee’s entitlement to redundancy pay under the National Employment Standards (NES);
  • clarify the provisions relating to the calculation of the redundancy benefit period; and
  • delete the provision relating to certain former employees of the Murray-Darling Basin Commission (MDBC) as it no longer has any application.

3. The changed arrangements only impact on certain former APS or Parliamentary Service employees who receive a redundancy benefit on termination of their employment on or after 1 January 2010 in cases where the redundancy benefit includes a NES component. 

4. The new arrangements do not affect persons who received a redundancy benefit from the APS or the Parliamentary Service prior to 1 January 2010 – the redundancy benefit period for persons in this situation will continue to be calculated on the basis of the full redundancy benefit paid to the employee.

5. The changed arrangements come into effect on 21 April 2010.

Background

6. Clauses 4.4 and 4.4A of the Directions provide that a redundancy benefit recipient (as defined) cannot be employed as an APS employee or as a locally engaged employee for a certain period (calculated in accordance with the Directions) unless certain circumstances apply.

7. The Public Service Commissioner has amended clauses 4.4 and 4.4A of the Directions in Public Service Commissioner’s Amendment Directions 2010 (No.1) (the Amendment Directions).  The Amendment Directions are available on the Commission’s website.  A consolidated version of the Directions, incorporating this latest amendment, is also available on the Commission’s website.

8. This circular replaces previous advice on this issue (circular 2009/2 of 25 February 2009).

Scope of the amendments

Impact of the NES on calculation of the redundancy benefit period

9. Where an employee receives a redundancy benefit on termination of employment from an APS agency or from the Parliamentary Service, the restriction period will continue to be linked to the level of the redundancy benefit received by the individual.

10.  From 1 January 2010, APS or Parliamentary Service employees who have had their employment terminated on excess grounds may have an entitlement to a redundancy benefit under the NES, as set out in s.119 of the Fair Work Act 2009.

11.  The current restriction provision was targeted at employees who elect to take a voluntary (i.e. early) redundancy payment, forgoing a retention period where they would have remained employed for a set period.  Generally, employees who enter into a retention period have not been subject to a restriction on re-employment as no redundancy payment has been paid upon termination.  However, with the 1 January 2010 introduction of the NES, people who serve a retention period will also become eligible for a NES redundancy payment.

12.  As the NES sets a minimum redundancy standard applicable across the community, it has been decided to exclude this component of an individual’s redundancy entitlement when calculating the restriction period applying to subsequent employment in the APS, irrespective of whether a person opted for early termination or was terminated at the end of, or during, a retention period. 

13.  As a result of these changes (detailed below), the restriction period applying to employees will either be the same as it was prior to the introduction of the Amendment Directions, or will be reduced if the employee’s redundancy benefit included a NES component.  The amendments will not result in a longer restriction period for any redundancy benefit recipients.

Impact on persons electing voluntary redundancy

14.  For employees who elect to take a voluntary redundancy payment as opposed to retention, the revised method of calculating the redundancy benefit period as set out in the Amendment Directions will result in the restriction period being reduced, where employment is terminated on or after 1 January 2010.  For example:

  • the maximum restriction period will change from 48 weeks to 36 weeks for employees with 24 or more years service, and
  • there will be a restriction period of 4 weeks or less for employees whose redundancy payment is based on less than 10 years service. 

15.  For former APS or Parliamentary Service employees terminated prior to 1 January 2010, any redundancy benefit paid to the employee would not have included a NES component and the restriction period in these circumstances should continue to be calculated on the basis of the full redundancy benefit paid to the employee.

Application to SES incentive to retire payments

16.  The above arrangements should also be applied to SES employees who accept an incentive to retire payment and retire in accordance with s.37 of the Act (or the equivalent provision applying to SES employees in the Australian Parliamentary Service) on or after 1 January 2010.

Impact on persons electing retention in employment

17.  Irrespective of their termination date, employees who are terminated at the end of their retention period and receive no employer redundancy benefit (apart from the NES benefit) are not subject to a restriction on re-engagement in the APS. 

18.  A number of agency enterprise agreements or other workplace arrangements provide that where an employee enters into a retention period, the agency can terminate the employee’s employment prior to the expiration of the retention period and pay the balance of the period as a lump sum payment. 

  • Where an agency agreement already provides that this lump sum payment is to be adjusted by the employee’s NES redundancy entitlement, and termination of employment occurs on or after 1 January 2010, the calculation of the restriction period should be based on the amount of the lump sum payment (i.e. excluding the NES component). 
  • However, where an agency agreement made prior to 1 January 2010 does not include any reference to NES redundancy payments, the redundancy benefit period in these circumstances should be calculated on the basis of the whole of the lump sum payment, regardless of the date of termination of employment.  The reason for this is that transitional regulations made under the Fair Work Act provide that an employee terminated on or after 1 January 2010 has no entitlement to NES redundancy pay in these circumstances, provided the value of the retention period and any lump sum payment is greater that the NES amount that would otherwise be applied to the employee.
  • Further information on these FW Act transitional regulations is contained in DEEWR’s Workplace Relations Advice 2009/9, which is available on DEEWRs website at http://www.workplace.gov.au/workplace/Organisation/Government/Federal/WRAdvices/.

Other amendments relating to the calculation of the redundancy benefit period

19.  Clause 4.4 of the Directions continues to specify that the ‘redundancy benefit period’ is to be calculated by dividing the amount of the person’s redundancy benefit (gross amount in dollars), by the person’s weekly salary that was used to calculate the benefit (see subclause 4.4(3)).  However, the definition of a redundancy benefit in subclause 4.4(2) has been amended to exclude any NES component of such a benefit. 

20.  In addition, the provision relating to the calculation of the redundancy benefit period has been amended to:

  • clarify that the above calculation can result in an restriction period expressed in weeks and days, and that where such a calculation results in a part day absence, the restriction period should be rounded down to the nearest equivalent whole day; and
  • specify that in cases where an employee has both full-time and part-time service and the part-time salary is used for the purpose of calculating the APS redundancy benefit, the redundancy benefit period should be calculated on the basis of the full-time equivalent salary used to calculate the APS redundancy benefit;
  • this change will ensure that employees in this situation are not excluded for a longer period than they should be by virtue of their part-time service falling last.

Application to Murray-Darling Basin Commission employees

21.  Subclause 4.4A(1) of the Directions provided that former employees of the MDBC who did not accept an offer of APS employment made under s.72(1)(d) of the Act, and who received a redundancy benefit were included in the definition of a ‘redundancy benefit recipient’.  The Amendment Directions have deleted the reference to ex-MDBC employees as the provision is now obsolete.

Engagement of redundancy benefit recipients prior to the expiry of the redundancy benefit period

22.  There will continue to be limited scope for an agency head to engage a redundancy benefit recipient in circumstances where the redundancy benefit period has not expired. 

23.  Clause 4.4A of the Directions sets out the steps an agency head must follow prior to engaging such a person. These requirements have not been changed.

Implementation

24.  The amended arrangements can be applied to engagements made from 21 April 2010.  The Amendment Directions are able to be disallowed by Parliament.  Further advice will be issued should disallowance occur.

Further advice

25.  Consolidated advice on the operation of the arrangements applying to the employment of redundancy benefit recipients is available on the Commission’s website.  That advice suggests that agencies may consider issuing a pro-forma letter which advises staff of their redundancy benefit period when terminating employment on excess grounds, which individuals could then provide when applying for future jobs in the APS.  In circumstances where termination has occurred on or after 1 January 2010, agencies will need to review any such documentation in the light of these changed arrangements.

26.  Agencies’ corporate areas can obtain further information on the matters raised in this circular by contacting the Commission. It may be appropriate for more complex or sensitive queries to be dealt with in writing.  Individual APS employees should contact the corporate area in their own agency in the first instance.

 

Damian West
Acting Group Manager
Workforce Policy Group