External

  1. In determining whether an employee is entitled to continuation or resumption of incapacity payments following a redundancy it is necessary to determine whether or not the employee is able to earn in suitable employment.

  1. In defining 'suitable employment', sub-section 4(1) of the SRC Act distinguishes between cases on the basis of whether the employee's termination of employment was voluntary or involuntary.  The effect of this distinction is, briefly, that:
  1. if the employee received an "involuntary redundancy" then, for the purposes of calculating incapacity, suitable employment can only be with the Commonwealth (this does not prevent the ex-employee from seeking employment outside the Commonwealth); and
  2. if the employee received a "voluntary redundancy" then the decision maker has the option to consider whether or not employment outside the Commonwealth is "suitable". 

For example:

  • where an employee has actively sought redundancy, whether by substitution or simply by a random "hands up" acceptance of voluntary redundancy (VR), then this should be treated as a totally voluntary separation (i.e. the employee has voluntarily removed themselves from employment);

  • on the other hand, if the employee is declared excess with no reasonable ongoing employment options (i.e. those involving large scale cessations, small offices, specialist classifications, whole program closures or closures in states where there is a limited Commonwealth presence), then there is scope to regard the separation as involuntary and give the employee the benefit of the less stringent test on ability to earn that applies to those whose employment was involuntarily terminated.  Employees in this situation should be dealt with on a case by case basis, considering issues such as:

  • the medical condition in question, any permanent work restriction and the employee's overall ability to achieve a sustainable RTW;
  • the hours worked prior to separation;
  • the nature of the work being undertaken; and
  • the extent of the redundancy program in the agency from which the employee separated.

  1. As stated above, in some cases the redundancy, due to the circumstances surrounding the individual's separation, cannot be seen as totally voluntary.  As such, advice to employees and employers will indicate that separation will not necessarily cease entitlement to incapacity payments.