Small employers have to pay severance pay

Austrlian Industrial Relations Commission ends exemption for employers with less than 15 workers
||Last Updated: 04/21/2004


landmark decision from the Australian Industrial Relations Commission means small employers in Australia will now have to pay severance pay to workers.

The decision affects more than 540,000 small businesses that employ fewer than 15 workers, according to an article in the

Brisbane Courier-Mail

. Small employers claim the changes will add an extra $186 million Cdn to their overheads.

The commission’s decision means small employers are no longer exempt from paying severance, and will have to provide eight weeks’ pay to workers let go after four years of severance. It also set a new standard for large and medium organizations. Instead of eight weeks’ pay, as was the case previously, workers with between nine and 10 years service will get 16 weeks.

But the commission decided not to extend protection to casual workers. Currently, about 25 per cent of Australians are employed as casual workers.

The decision was slammed by the Australian government. Joe Hockey, Australia’s Small Business Minister, said it would be a huge burden on smaller firms and would limit economic growth in the country.

Peter Anderson, workplace policy director for the Australian Chamber of Commerce and Industry, called it a “bleak day” for employers and a “savage hit” on small firms. He said the extra money to cover severance pay isn’t growing on trees and some employers will inevitably be forced to layoff more staff or, in the worst-case scenario, declare bankruptcy.

The commission did include a proviso in its decision that small firms that are struggling can plead for an exemption.

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