Engagement of people who have received a redundancy benefit
There are arrangements applying in the Australian Public Service (APS) which limit the subsequent employment of people who have received a redundancy benefit. The circumstances where the restrictions apply are set out in section 48 of the Australian Public Service Commissioner's Directions 2016 (the Directions).
Who is covered by the arrangements?
The arrangements apply to a person who has received a redundancy benefit from an APS agency or the Australian Parliamentary Service and who is still within their 'redundancy benefit period' or restriction period.
These arrangements do not apply to persons who have received a redundancy benefit from a non-APS Commonwealth employer, from a State/Territory Government employer, or from the private sector. There are no restrictions on such persons applying for engagement.
Each of the following payments is considered to be a redundancy benefit:
- a severance payment, or similar payment, made to an ongoing employee on cessation of employment
- a payment made to an employee as a result of the shortening of a retention period
- an incentive to retire payment.
For the purposes of section 48 of the Directions, a redundancy benefit specifically excludes any payment made to an employee under the National Employment Standards (NES), as set out in section 119 of the Fair Work Act 2009.
Payments made to non-ongoing employees as compensation for the early termination of their engagement are also excluded.
How is the redundancy benefit period calculated?
The redundancy benefit period is based on the number of weeks received as a redundancy benefit. The redundancy benefit period is calculated by dividing the redundancy benefit (gross amount in dollars) by the person's weekly salary that was used to calculate the benefit.
The redundancy benefit period calculated is rounded down to the nearest equivalent whole day.
Where the person's redundancy benefit is calculated on the basis of part-time salary, the weekly salary to be used is the full-time equivalent of that part-time salary. This will ensure that the redundancy benefit period is not overstated by the use of the part-time salary in the calculation.
Other amounts that a person might receive on separation, such as payment for accrued entitlements and payment in lieu of notice of termination, are not taken into account when calculating the redundancy benefit period.
A table showing an indicative estimate of the likely restriction period that will apply is attached to this page.
NES and the calculation of the redundancy benefit period
Employees who have their employment terminated on excess grounds may have an entitlement to a redundancy benefit under the NES. The NES component of an individual's redundancy entitlement is excluded when calculating the redundancy benefit period.
Persons whose employment is terminated at the end of a retention period and who do not receive any redundancy payment, other than their NES entitlement, are not subject to a restriction on re-engagement.
However, where a retention period is terminated early with payment in lieu, the person will be subject to a restriction period. In these cases the calculation of the restriction period should be based on the actual lump sum payment, excluding the NES component.
What needs to be done to engage a person still within their redundancy benefit period?
As per subsection 48(1) of the Directions, agency heads have limited scope to engage a person who is still within their restriction period.
Engagement as an ongoing APS employee or as a non-ongoing SES employee
An agency head is required to seek the approval of the Australian Public Service Commissioner before engaging a redundancy benefit recipient as:
- an ongoing employee at an SES or non-SES level, or
- as a non-ongoing SES employee.
An agency head also needs to be satisfied that the engagement is essential to the agency's operations having regard to the nature of the duties to be performed and the skills, experience and/or qualifications of the person.
The Commissioner's approval must be sought prior to engaging a person who is within their restriction period. In doing so, the agency head should address the following:
- the specific skills, experience and/or qualifications required for the performance of the particular duties
- the level of benefit received, the organisation it was received from and the time that has elapsed since it was received, and
- any other factors considered relevant by the agency.
Engagement as a non-ongoing non-SES employee
An agency head may engage a redundancy benefit recipient as a non-ongoing employee at a non-SES classification.
For such engagements, the agency head must be satisfied that the engagement is essential for the agency's operations.
What pre-engagement procedures should agencies put in place?
Agencies' pre-engagement documentation should make it clear to applicants that they are to declare whether they have received a redundancy benefit from an APS agency or the Parliamentary Service. In such cases, agencies must establish whether the person's restriction period has expired, either through information provided to the individual by their former agency, and/or by contacting the person's former agency to establish/confirm relevant details.
When terminating employment on excess grounds, agencies are encouraged to consider issuing the employee with advice on the duration of the restriction period. Individuals could then provide this information to other agencies if they apply for subsequent employment in the APS.