Senior Executive Service - Ending Employment
A Senior Executive Service (SES) employee’s employment can end for different reasons. They may resign, retire or be dismissed by their employer.
An SES employee may resign at any time by submitting their notice of resignation in writing to their manager. Generally, notice periods are specified in the SES employee’s employment instrument. Further information on resigning from the Australian Public Service (APS) is available on the Resignation page.
Section 37 - Incentive to Retire
Section 37 of the Public Service Act 1999 (PS Act) allows an Agency Head to offer an SES employee an incentive to retire payment. An incentive to retire payment is not an entitlement and may be offered to any SES employee regardless of whether they have reached retirement age. Without limiting an agency’s flexibility, an offer of an incentive to retire may be appropriate where:
- the employee is excess to requirements; or
- the employee no longer has the skills required to perform their SES role.
An incentive to retire is not intended to be offered:
- as a reward for long service
- where the employee has expressed their intention to retire within the next 12 months
- as a replacement for a performance management process, or
- in circumstances where the employee is suitable for redeployment to another SES position at the same level.
The PS Act does not limit the offer of an incentive to retire to ongoing SES employees, however the offer of an incentive to retire for a non-ongoing employee would not usually be considered as there may be more appropriate mechanisms within a non-ongoing employee’s contract. In determining whether an incentive to retire should be offered to a non-ongoing employee, consideration should be given to whether:
- There are additional mechanisms for ending a non-ongoing employee’s employment which may be more appropriate than providing an offer of an incentive to retire.
- An incentive to retire payment represents a good use of public money, given that a non-ongoing employee is engaged for a specified term.
The offering of incentives to retire to SES employees should be handled with due care.
Making an offer
Where an Agency Head has determined it is appropriate to offer an SES employee an incentive to retire:
- The notice must be made in writing by the Agency Head
- Include the amount the SES employee will be entitled to if the employee retires within a specified period of time.
Supporting an employee to make a decision about an offer
It is good practice to help the employee make an informed decision by ensuring they have all the relevant information. This may include support for financial advice and career counselling. Agencies will also need to ensure that any relevant terms in the employee's employment instrument are met.
When determining the amount to offer, both community and employee expectations should be taken into consideration when balancing the incentive with the proper use of public money.
An agency has the discretion to determine the amount of the incentive payment, except when an incentive to retire is offered as a result of the SES employee being deemed excess to requirements. In this circumstance, the amount cannot be less than prescribed in the National Employment Standards (NES) at section 119(2) of the Fair Work Act 2009 (FW Act).
In determining the amount to offer, an agency should consider:
- The reason for the offer of an incentive to retire
- The SES employee’s length of service. For example a higher amount may be offered to an employee with a shorter period of service to ensure there is sufficient incentive; and
- The SES employee’s possible future earnings and likelihood of a significant period without an income.
- for example a labour market where opportunities are readily available, reduces the likelihood of the employee being without an income for a significant period. In this circumstance consideration of a lesser amount assists in balancing incentive with the principle of the proper use of public money. Access to an income source, for example a superannuation pension, would also be a factor to take into consideration in balancing incentive with the principle of the proper use of public money.
Using standard non-SES redundancy formula
As a guide, an agency may wish to consider calculating the payment based on the standard non-SES redundancy formula of two weeks' pay per year of service, to a maximum of 48 weeks. For the purpose of calculating the payment based on years of service, agencies should use the same definition of service used for non-SES redundancies. Service which counts for severance benefit purposes as defined in clauses 24.7 to 24.10 of the Australian Public Service Enterprise Award 2015.
Consulting the Australian Public Service Commissioner (the Commissioner)
Regardless of the method used to calculate the payment, Agency Heads are to consult the Commissioner where they are considering offering a payment that is equivalent to more than 48 weeks’ pay.
Salary for incentive purposes
Where an agency opts to use the standard non-SES redundancy formula, the SES employee's base salary is to be used when calculating the incentive to retire amount. Payments relating to motor vehicle allowances, performance pay, bonuses or other allowances should not be included. Where an agency uses an alternative method for calculating the incentive to retire amount and needs to determine if the amount is equivalent to more than 48 weeks (for the purpose of determining whether they should be consulting the Commissioner), they should also use the SES employee’s base salary.
Payment in lieu of notice
An SES employee who has accepted an offer of an incentive to retire is entitled to a notice period as defined in Section 117(3) of the FW Act. Where it is not possible to provide adequate notice of termination of employment, or the Agency Head does not require the employee to work through the notice period, a payment in lieu of notice may be appropriate in addition to the incentive amount.
Salary for calculating the payment in lieu of notice includes all entitlements the employer would have been liable to pay if the employee had worked through the notice period.
An offer that is declined
If an incentive to retire offer is declined, an Agency Head may take other management action. An Agency Head may:
- redeploy the employee at the same or lower classification, or
- terminate the employee’s employment under section 29 of the PS Act. This could be done, for example, on the grounds that the employee is excess to requirements (note: section 38 of the PS Act requires a certificate from the Commissioner before an Agency Head can terminate the employment of an ongoing SES employee pursuant to section 29 of the PS Act).
Re-engagement of an incentive to retire recipient
Employees who retire with an incentive are subject to the same limitations on re-engagement as non-SES employees who leave the Australian Public Service voluntarily with a redundancy payment. These limitations are found in section 64 of the Australian Public Service Commissioner's Directions 2022 (the Directions). Further information is available on the engagement of people who have received a redundancy benefit page.
Termination of employment
An Agency Head considering termination of employment for an ongoing SES employee must write to the Commissioner detailing the circumstances of the case. This is not required for the termination of employment for a non-ongoing SES employee. An SES employee’s employment may be terminated under section 29 of the PS Act; however, an Agency Head cannot terminate the employment of an SES employee unless the Commissioner has issued a certificate stating that:
- all relevant requirements of the Directions have been satisfied in respect of the proposed termination; and
- the Commissioner is of the view that termination is in the public interest (section 38 of the PS Act).
In the first instance, agencies should contact the Employment Policy team at the Commission on (02) 6202 3857 or at email@example.com.
Where an SES employee has retired under section 37 of the PS Act or had their employment terminated under section 29 of the PS Act, consideration must be given to an adjustment to the agency's SES cap. It is expected that the SES cap will be reduced where an SES role is abolished as it is no longer required. If the role is still required, there is generally no reduction in SES cap.
Templates for offering an incentive to retire payment to an employee and an acceptance letter are available.
Agencies may contact the Employment Policy team in the Commission for further information on (02) 6202 3857 or at firstname.lastname@example.org .