WR 2009/9: Interaction between retention or redeployment periods and the National Employment Standards

Last updated: 04 Dec 2009

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The purpose of this Advice is to inform agencies and authorities of amendments to the Fair Work (Transitional Provisions and Consequential Amendments) Regulations 2009 (the Transitional Regulations). The Transitional Regulations have been amended to take into account the effect the National Employment Standards (NES) will have on typical public sector retention or redeployment provisions.

Interaction between retention or redeployment periods and the NES

2. A number of workplace instruments operating in Australian Government employment include specific arrangements which provide for excess employees to serve a retention or redeployment period as an alternative to receiving a service-based redundancy payment.

3. From 1 January 2010, the operation of the NES may have the effect of requiring an additional redundancy entitlement at the end of the retention or redeployment period. This would mean that an employee who had elected to serve a retention or redeployment period would receive a double entitlement, rather than the retention or redeployment period acting as an alternative to a redundancy payment. The amendments to the transitional regulations address this issue as described below.

4. The amount of the redundancy payment which may apply where an employee enters into a retention or redeployment period would be the minimum standard set out in the NES, as there would be no applicable redundancy payment under the workplace instrument.

Agreements made prior to 1 January 2010

5. The Transitional Regulations have been amended to address the interaction between the NES and retention or redeployment periods in agreements made before 1 January 2010. This includes both enterprise agreements and transitional instruments, such as collective agreements, certified agreements and Australian Workplace Agreements.

6. The amendments to the Transitional Regulations apply to Commonwealth public sector employees. This definition includes Australian Public Service (APS) employees, employees of non-APS Commonwealth Authorities, and employees engaged under the Parliamentary Service Act 1999.

7. The amended Transitional Regulations provide that where a public sector employee elects to serve a retention or redeployment period instead of accepting a redundancy payment, that employee would:

  • not receive redundancy pay under the NES where the amount paid to the employee during the retention or redeployment period is greater than, or equivalent to, the amount payable under the NES; or
  • receive a redundancy payment equivalent to the difference between the NES entitlement and the value of the retention period where the amount payable during the retention or redeployment period is less than the benefit available under the NES.

8. In doing so, the amended Transitional Regulations ensure that employees who serve a retention or redeployment period are neither advantaged nor disadvantaged in terms of their minimum redundancy entitlement under the NES.

9. Illustrative examples of the effect of the amended Transitional Regulations are at Attachment A.

10. For the avoidance of doubt, the amended Transitional Regulations also provide that service prior to the introduction of the NES (before 1 January 2010) will count for the purposes of calculating an APS employee’s NES redundancy entitlement, irrespective of whether the employee elects to receive an APS redundancy benefit or serve a retention period.

Australian Public Service enterprise agreements made from 1 September 2009

11. Part 4.5 of the Australian Government Employment Bargaining Framework (AGEBF) requires APS enterprise agreements made on or after 1 September 2009 to include an offsetting arrangement to address this double entitlement. This offset arrangement has the effect of reducing an employee’s retention period by the amount of redundancy payment they would be eligible to receive under the NES. Page 37 of the Supporting Guidance to the AGEBF provides further guidance on this requirement.

12. Where an enterprise agreement already includes an offsetting arrangement taking into account the effect of the NES redundancy entitlement on retention periods, the amendments to the Transitional Regulations do not apply as they are not necessary.

Enterprise agreements made from 1 January 2010

13. The amendments to the Transitional Regulations will not apply to enterprise agreements made on or after 1 January 2010.

14. APS enterprise agreements made on or after this date are to include the offsetting arrangement as required under Part 4.5 of the AGEBF.

15. Non-APS enterprise agreements should be drafted to take into account the effect of the NES redundancy entitlement where it is proposed that retention periods be included.

Further information and advice

16. The Transitional Regulations as amended are available online at the Commonwealth Law website.

17. Should you require further information or assistance on this matter, please contact your APSC Client Contact directly, email agebf@apsc.gov.au.

Justine Jones
A/g Branch Manager
Public Sector Branch

Attachment A: Illustrative examples of the effect of the amended regulations

Example 1

An excess employee with greater than five but less than six years’ service enters into a retention period of seven months under the provisions of an enterprise agreement made before 1 January 2010.

Under the NES, that employee would become eligible for a redundancy payment equivalent to 10 weeks’ wages at the end of the retention period.

In this case, as the employee has received a greater benefit by electing to serve the retention period than he or she would have received under the NES redundancy entitlements (ie, seven months’ wages as opposed to 10 weeks), the employee does not receive a redundancy payment under the NES. If alternative employment is not found during the retention period, that employee’s employment would be terminated at the end of the retention period with no further payment.

Example 2

An excess employee with greater than nine but less than ten years’ service enters into a retention period of three months under the provisions of an enterprise agreement made before 1 January 2010. Under the NES, that employee would become eligible for a redundancy payment equivalent to 16 weeks’ wages at the end of the retention period.

In this case, the employee would have received a greater benefit under the NES than by serving a retention period. If alternative employment is not found during the retention period, at the end of the retention period the employee would receive a payment equivalent to the difference between the NES entitlement and the value of the retention period (ie, the difference between the 16 weeks’ wages payable under the NES and the three months’ wages earned during the retention period).

Example 3

An excess employee with greater than six but less than seven years’ service enters into a retention period of seven months under the provisions of an enterprise agreement made before 1 January 2010.

Under the NES, that employee would become eligible for a redundancy payment equivalent to 11 weeks’ wages at the end of the retention period.

The enterprise agreement contains an offsetting arrangement to take into account the effect of the NES redundancy entitlement. The offset arrangement reduces the retention period by 11 weeks and a payment of 11 weeks’ wages is made in accordance with the NES at the conclusion of the retention period.

Accordingly, the amended Transitional Regulations do not apply to this situation.