Redundancy and Redeployment

Application

This Policy applies to all departments and public sector bodies of the State of Victoria and their non-executive level employees, as defined under the Public Administration Act 2004 (Vic) (PA Act) and other Victorian legislation.

Overview

In some instances, public sector entities will be required to restructure their workplaces to meet changing Government priorities, support the introduction of new technology or to otherwise change existing work practices or structures. These changes may ultimately lead to some roles or functions being made redundant.

In these circumstances, public sector employers must adhere to the following principles:

• ensure that the impact of restructures on public sector employees is limited as far as reasonably practicable
• responsively deploy employees to support changing government priorities where there are reasonable opportunities to do so prior to restructuring of the workplace,
• ensure all existing legal and policy obligations are followed, including the obligations set out in the relevant enterprise agreement and this policy,
• consult with employees and unions in accordance with consultation obligations set out in relevant industrial instruments and give genuine consideration to any alternate proposals made by employees and unions,
• explore and pursue all reasonably possible means to secure continuation of employment of affected employees, including but not limited to, redeployment and retraining,
• provide support to affected employees to consider and pursue other employment opportunities,
• only use targeted separation packages as an option of last resort.

Application to Employees

The redundancy and redeployment obligations outlined in this Policy apply to all employees in one of the abovementioned employers, other than:

• executives,
• casual employees, and
• fixed term and maximum term contract employees (except in limited circumstances considered below).

Consultation obligations

Public sector employers are expected to promote industrial relations based on consultation and cooperation between employers, employees, and unions, and make efforts to reduce the impact of major changes on public sector employees as far as reasonably practicable. This will involve compliance with consultation obligations in enterprise agreements, as well as engaging in genuine information sharing and discussion with employees and unions as appropriate in the circumstances.

All public sector employers are expected to comply with existing consultation obligations in the event of major change that it is likely to have a significant effect on employees. This will include changes to technology and changes to existing workplace practices or structures, where these changes may, if implemented, lead to redundancies.

Redeployment

If an employee’s role is no longer required and the employee is declared surplus to the organisation’s requirements as a result, a redeployment process must commence. As part of this process, an employee may be deployed or transferred to a new position in accordance with the relevant Victorian legislation.

At the time of declaring a role surplus to requirements, the employer must confirm in writing to the employee:

• the date their role was declared surplus
• the redeployment process that will be followed to identify other suitable roles that the employee could be redeployed to
• the supports available to affected employees during the redeployment process
• their rights and obligations throughout the redeployment process

Employers covered by the Victorian Public Service Enterprise Agreement 2024 (VPS Agreement), or its successor, must also follow the redeployment principles set out in that enterprise agreement as well as the VPS Redeployment Common Policy. An employee covered by the VPS Agreement, who has been declared surplus, will have priority access to any vacancy across the VPS, both at the employee’s classification level or below their classification level, for which they are qualified and capable of performing. Other public sector employers may also consider the provisions set out in the VPS Redeployment Common Policy as a practical guide for managing redeployment within their own entity.

For employees of all other public sector employer’s, redeployment opportunities are limited to vacancies within their employing entity, both at the employee’s classification level or below their classification level, for which the redeployee is qualified for and capable of performing.

Where a surplus employee is placed into a fixed term role for a period longer than three months, due to an internal assignment or secondment, the redeployment period and associated supports may be carried out either concurrently with, or at the end of, that fixed term role. The duration and nature of the fixed term role may be relevant to which approach is appropriate in the circumstances. The public sector employer must continue to engage with the redeployee during the period of their fixed term role, and the redeployee will continue to have priority access to vacancies during the term of their fixed term placement.

Termination of employment is an option of last resort. Redeployment is the preferred outcome, having regard to the employee’s classification, skills and capability. All public sector entities are expected to make every reasonable endeavour to redeploy surplus employees within a reasonable timeframe. The length of a reasonable redeployment period may depend on the circumstances and vary from agency to agency based on a variety of factors, including the size of the organisation and the nature of change being accommodated and enterprise agreement or policy terms.

The Victorian Governments expects all public sector employers to participate in the redeployment process in good faith and make all reasonable attempts to redeploy the surplus employee to a suitable role.

Support for affected employees

Public sector employers must ensure that all employees affected by organisational change, particularly where such change may result in their role being declared surplus, are provided with the appropriate support and assistance to consider and pursue all options that are available to them. Depending on the circumstances, this support may include, but is not limited to:

• counselling and support services
• retraining
• career planning
• assistance with the preparation of job applications
• interview coaching
• time release to participate in career support activities/workshops and/or to attend job interviews
• reasonable provision of independent financial advice for employees who are eligible to receive a separation package.

Separation packages

There are two types of separation packages:

• Voluntary Departure Packages (VDP), or
• Targeted Separation Packages (TSP).

Both separation packages are Government benchmarks that must not be exceeded.

Voluntary Departure Package

A VDP is a scheme that an employer may implement to offer financial incentives to certain groups or classes of employees to retire or resign, for example when the employer is rationalising or undertaking significant reorganisations of their business operations in response to changing Government priorities.

Public sector employers must engage with their portfolio department and IRV prior to submitting their VDP scheme for ATO approval. Further, affected unions must be consulted on the scope and application of the VDP scheme prior to submitting a proposed scheme to the ATO for approval. Public sector employers considering undertaking a VDP program should also make contact the ATO to ascertain specific ATO requirements and approval criteria.

VDPs must be approved by Australian Taxation Office (ATO) before being implemented, as there are taxation concession implications related to these payments. In examining an employer’s request, the ATO will, amongst other things, examine the number of packages on offer, the criteria for allocating packages (including criteria that will apply in the event of over-subscription), the classes or groups of employees who are eligible to express interest, and the reasons for offering VDPs.

In designing a VDP scheme, workforce planning should be the principal consideration. Access to VDPs should be limited to classes or groups of employees that can be objectively determined, who are affected by the reorganisation of the employer’s business operations or by changing Government priorities. It would not generally be expected that schemes will be described in such broad terms as to apply at large to all employees in a public sector employer unless the reorganisation of the employer’s business operations or changing Government priorities was such that it will have similar impact on all employees across the organisation.

Further, to be eligible for a VDP an employee must:

• be an ongoing employee
• not be on unpaid leave at the time of separation of employment
• not be a probationary or graduate employee.

Once approved by the ATO, VDPs paid to employees as part of an approved scheme attract concessional taxation treatment. This means that VPDs attract more beneficial taxation treatment than the payment of ordinary salary and wages. A VDP comprises of the following elements:

• four (4) weeks’ pay, irrespective of the employee’s length of service; plus
• a lump sum voluntary departure incentive of up to $15,000 (for a full-time employee); plus
• two (2) weeks’ pay per each completed year of continuous service up to a maximum of 15 years.

All payments are pro-rata for periods of part-time employment (see payment calculations and weekly pay below for further information).

An employee who accepts an offer of a VDP:

• is not eligible for re-employment or re-engagement (including via a fee for service contract or through a labour hire agency) in the Victorian Public Sector for 3 years from the date of their departure (Exclusion Period), and
• must agree not to seek or accept re-employment with any Victorian Public Sector entity either directly, on a fee for service basis or through a labour hire organisation for the duration of their Exclusion Period as a condition of accepting a VDP.

In exceptional or unforeseen circumstances an agency head may approve earlier re-employment. However, it is expected that such circumstances would be rare and only apply in limited circumstances. No undertakings or representations should be made to employees regarding their earlier re-employment prior to the employee’s departure.

Public sector entities who anticipate the need for significant change or reorganisation of their business, which may warrant the need to offer VDPs, must engage with their portfolio department as early as possible to discuss the requirements for implementing a VDP scheme. In addition to engaging with their portfolio department, public sector employers are expected to contact Industrial Relations Victoria (IRV) directly if they are seeking to implement a VDP scheme.

Targeted Separation Package

Employees whose roles are declared surplus to requirements and have not been successfully redeployed after a reasonable timeframe, may be entitled to a TSP.

TSPs are paid in the event of termination of employment as a result of the employer no longer requiring the employee’s role to be performed and where there is no opportunity for continued employment within the employer. TSPs may arise from changing Government priorities, closure or discontinuation of facilities, particular functions, or entire entities, or where the employee’s duties are no longer required by the employer.

TSPs are a redundancy package and an option of last resort. Employers must comply with the consultation obligations outlined in relevant industrial instruments and take all reasonable steps to exhaust redeployment opportunities before issuing a TSP. Employees who do not actively participate in the redeployment process and take all reasonable steps to exhaust redeployment opportunities, or who fails to accept a suitable offer of employment, will be ineligible for a redundancy package. This does not prevent the employer and employee from also agreeing for some or all of the redeployment period to be paid in lieu, in addition to the payment of the TSP, in circumstances where redeployment within a reasonable period would not be likely.

A TSP comprises the following elements:

• four (4) weeks’ pay, irrespective of the employee’s length of service,
• one (1) additional week of pay if the employee is over 45 years of age and has completed at least two (2) years of continuous service, and
• two (2) weeks’ pay for each completed year of continuous service up to a maximum of 10 years

TSPs are not voluntary, so unlike VDPs, no re-employment restrictions apply to employees who are paid a TSP.

Notice or payment in lieu of notice

In addition to the relevant packages outlined in this Policy, public sector employers must provide notice of termination or payment in lieu of notice (as per the relevant enterprise agreement or otherwise in accordance with the National Employment Standards under Part 2-2 of the Fair Work Act 2009 (Cth) (FW Act)). An employer should either provide notice of termination under the applicable industrial instrument prior to the end of the redeployment period or provide payment in lieu of notice at the conclusion of the redeployment period.

Relevant considerations for calculating packages

Calculation of Continuous Service for the purpose of a separation package

Continuous service for both VDPs and TSPs refers to Victorian public sector agency employment only. Employment with the Commonwealth, other States or Territories, or local government is not included, even where such service may be included for the purpose of calculating other employee entitlements, for example, long service leave.

Continuous service for the purposes of redundancy includes all periods of service in any Victorian public sector agency. This is provided there are no breaks in service between or within each period of service (other than due to breaks caused by approved leave) and provided that no special separation/redundancy payments have previously been made with respect to any of those periods.

Periods of leave without pay do not break continuity but do not count as service for the purposes of calculating an employee’s entitlement. When calculating separation packages, employers should have regard to inequitable outcomes that may result from the averaging approach to calculating separation packages. Employers should exercise discretion to ameliorate individual calculation outcomes on a case-by-case basis having regard to factors including gender equity, intersectionality, and caring responsibilities.

Effect of part-time or casual continuous service on the calculation of weekly pay for the purposes of a separation package

The calculation of each week’s pay will be affected by an employee’s current or past part-time or casual continuous service.

Calculation of packages based on ordinary pay

Redundancy packages must be calculated based on the definition of ordinary pay in the relevant enterprise agreement. If there is no definition of ordinary pay, redundancy packages must be paid on the basis of an employee’s base salary, not including allowances and penalties.

Calculation basis for each package

VDPs must be calculated in accordance with the below table:

TSPs must be calculated in accordance with the below table:

Other entitlements

Participants who accept a VDP or receive a TSP must also be paid all other applicable accrued statutory entitlements (e.g., annual leave and long serve leave) based on their substantive base salary.

Accrued Annual Leave will be paid as per section 90 FW Act (unless a more beneficial provision applies under the applicable enterprise agreement).

Notice of termination will be paid as per section 117 of FW Act (unless a more beneficial provision applies under the applicable enterprise agreement).

Accrued Long Service Leave will be paid according to the provisions of the applicable enterprise agreement or other applicable employment instrument.

Fixed and Maximum Term Contracts

The Victorian Government acknowledges that employees on fixed term or maximum term contracts may also be impacted by changing circumstances which may mean that their positions become surplus to requirements. That is, where a role is no longer required but the employee’s contract has not yet reached its fixed or maximum term date, the situation may be akin to a position being made redundant. This would include situations where revisions to budget funding arrangements mean projects or functions cease to receive the funding previously allocated.

Additionally, while employees engaged on a fixed term or maximum term contract are generally not entitled to redeployment or redundancy benefits, consideration should be given to individual cases. This includes circumstances involving employees who have been employed on successive fixed or maximum term contracts and/or where fixed or maximum term employment has been utilised in a manner that is not compliant with the FW Act and/or the relevant enterprise agreement arrangements.

Fixed term contracts

Where a role performed by an employee on a fixed term contract is no longer required before the employee’s specified end date, the employer should make all reasonable attempts to find alternative meaningful work for the employee to perform for the remainder of their fixed term contract. Mobilisation in these circumstances should be limited to:

• consideration for fixed or maximum term roles only, and
• the period of engagement must be limited to the remaining period of the term under the contract.

Care should be taken to ensure that any attempt to mobilise the affected fixed term employee does not result in preference being given to them over an ongoing employee subject to redeployment.

Where, after a reasonable period it is clear that no alternative duties are available, and the employer wishes to end the contract early, consideration may be given to whether a Targeted Separation Package should be provided to affected employees. This should only be considered in exceptional circumstances, such as where a fixed term model of employment is not being appropriately utilised in accordance with the relevant enterprise agreement or policy, or where there is a significant duration of the contract remaining (e.g. (twelve (12) months or more)) and there are no suitable alternative duties available.

Maximum term contracts

A maximum term contract is a contractual arrangement expressed to nominally expire at a specified date, but which also allows the employer the right to terminate the contract early with an agreed notice period.

Where a role performed by an employee on a maximum term contract is no longer required, the employer should make all reasonable attempts to find alternative meaningful work within the employing entity for the employee to perform for the remaining duration of their maximum term contract.

Mobilisation in these circumstances should be limited to:

• consideration for fixed or maximum term roles only, and
• the period of engagement must be limited to the remaining period of the term under the contract.

Care must be taken, however, to ensure that application of the mobilisation does not provide a maximum term employee with an advantage to obtain an ongoing role by way of the preferential treatment afforded to an ongoing employee subject to redeployment.

Where termination of employment would be fully consistent with the terms of the contract, redundancy pay (targeted separation package (TSP)) will not be payable. However, and subject to any mobilisation efforts, employers should consider paying a TSP to an employee where there is a substantial period of their maximum term contract remaining (twelve (12) months or more). In order to prevent any future claims by the employee, where a TSP is provided it should be made clear to the employee that this payment is being made in lieu of receiving payment for the balance of the contract.

In some cases, the cost of applying the TSP formula could result in a higher cost than paying out the remainder of the term of the contract. For any employee who does not have more than 12 months remaining on their contract term, access to a TSP should be considered on a case-by-case basis and having regard to their length of service and the duration of the remainder of the contract term.

Further Information

For further information and advice employees and public sector union representatives should contact the local Human Resources or People and Culture Unit (or equivalent) of the relevant entity in the first instance.

People and Culture Representatives of Public Sector Entities should contact their Portfolio Department for further assistance in the first instance.

People and Culture Representatives of Portfolio Departments should contact their usual IRV portfolio contact for further assistance in the first instance.

Related Policies or Documents

• Consultation and cooperation in the workplace
• Secure Employment
• Long Service Leave
• Employment Categories and Secure Employment
• Application of the Fair Work Act 2009 (Cth) to public sector employers