A genuine redundancy payment is a lump sum payment received by an employee who is dismissed from employment because the employee’s position is genuinely redundant.
A payment cannot be both a genuine redundancy payment and an early retirement scheme payment due to the nature of each of these types of payment.
“Redundancy” refers to the situation where an employer no longer requires employees to carry out work of a particular kind or work of a particular kind at the same location.
Conditions to be Met
A genuine redundancy payment must satisfy the following conditions:
• the employee is dismissed before the earlier of the following:
o the day he or she turned 65
o if the employee’s employment would have terminated when he or she reached a particular age or completed a particular period of service – the day he or she would reach the age or complete the period of service
• if the dismissal was not at arm’s length – the payment does not exceed the amount that could reasonably be expected to be made if the dismissal were at arm’s length, and
• at the time of the dismissal, there was no arrangement between the employee and the employer, or between the employer and another person, to employ the employ the employee after the dismissal
A genuine redundancy payment does not include any part of a payment that was received by the employee in lieu of superannuation benefits to which the employee may have become entitled at the time of the payment was received or at a later time.
There are four necessary components required to constitute a genuine redundancy payment:
• the payment must be received “in consequence of” a termination of the employment
• the termination must involve the employee being dismissed from employment
• the dismissal must be caused by the redundancy if the employee’s position, and
• the redundancy payment must be made genuinely because of redundancy
If you have a query regarding an issue related to genuine redundancy payments or another employment law matter, please call us on 1300 QUINNS (1300 784 667) or +61 2 9223 9166 or complete and submit the online enquiry form and and our team of experienced Lawyers and Accountants will contact you to discuss your enquiry.