Employees leaving during redundancy notice period

Q/ If an employee is given 3 months notice of redundancy, and they find other employment within that period and want to leave early are they still entitled to their statutory redundancy payment?

A/ It is possible that redundancy pay will still be owed to the employee, but you may not have to pay out the remainder of the notice period.

While the Fair Work Act lists the amount of redundancy pay and notice an employee has to be given, it does not contain other provisions that cover situations such as yours. These provisions are only found in the Award/EBA or company policy that covers the employee.

You would look for a clause such as the following:

Employee leaving during notice period

An employee given notice of termination in circumstances of redundancy may terminate their employment during the period of notice. The employee is entitled to receive the benefits and payments they would have received under this clause had they remained in employment until the expiry of the notice, but is not entitled to payment instead of notice.

The ATO also accepts that in this situation the employee is still genuinely redundant and have simply re-negotiated their termination date. Tax Ruling 2009/2 says:

21/ Where an employee is given notice from their employer that they will be terminated at a specified time in the future due to genuine redundancy, that employee will be dismissed because of redundancy for the purposes of section 83-175. This will be the case even where an employee, following notification, negotiates with the employer or nominates to end their employment at an earlier time. Negotiation or nomination of the earlier date relates to the timing of the termination and not to the character of the termination as a dismissal. In determining whether any payment made in these circumstances would qualify as a genuine redundancy payment, the other conditions in section 83-175 would still need to be met.

Note – section 83-173 of the Income Tax Assessment Act sets out the rules as to when a payment on termination will be considered to be a genuine redundancy payment – such as the payment must be more than the person would have received if they had terminated voluntarily (e.g. resigned), must be made before the person turns 65 (or an earlier date in accordance with the employee’s employment conditions), that¬†there is no arrangement for the employee to be reemployed by the employer (or employed by a new employer that was arranged by the current employer) etc

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