Improved severance payments for State Awards

Nine months ago, the Australian Services Union applied to the SA Industrial Relations Commission to have improved minimum redundancy entitlements inserted into three of its Awards: Clerks (SA) Award; Clerks (Clubs Hotels Motels) Award, and the Social and Community Services Award.

At the same time another Union (LHMU) made identical applications for several of its Awards. The employers lodged a counter-application asking the Commission to award a much inferior standard of entitlement. The Unions sought to have all the applications joined and heard as a 'test case'. This was agreed to by the employer groups and the Commission.

Following lengthy negotiations and involvement of the Commission, the Unions and employer groups reached an agreed position. The outcome of that agreement was put before the Commission and heard by a Full Bench on Wednesday 11th May.

The Commission decided in favour of improved minimum Award provisions as follows:

• Employees (not working for 'small businesses') with between 5 & 6 years service will receive 10 weeks severance pay; between 6 & 7 years receive 11 weeks and those with 7 years or more service receive 12 weeks severance pay.
• Employees over 45 who have had 10 years service with organisations with 15 or more employees receive an additional 4 weeks severance pay.

A 'small business' is one that employs less than 15 employees. In reaching the agreement, the Unions have not resiled from the position that (despite recent decisions in the Federal and other State jurisdictions), there should be no differentiation between small and large employers. Unions have, however, committed to not making an application to the Commission to improve Award minimum entitlements for 'small business' employees prior to July 2007.

This was a pragmatic decision given the Federal Government's stated intention to introduce legislation that will relieve all small employers of the obligation to pay any severance pay. Additionally, the research has shown that it is largely workers over 45 who have lengthy service that are hardest hit when retrenched. The Commission clearly accepted the Unions' submissions that new provisions were required that recognise the hardship particularly experienced by this category of workers.