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Last updated: 21 May 1996

Interim guidelines for the management of excess staff in the APS

Please note: This document is for reference purposes only and is no longer considered by the APS Commission to be current. It may contain good practice advice and/or advice on the transitional arrangements between the 1922 and 1999 Public Service Acts.

Definitions and commonly used terms

"Act" means the Public Service Act 1922, as amended from time to time;

"Agency" means a department as defined in the Act;

"Agency award" means the APS Agency Specific Provisions Award or similar award or certified agreement specific to that agency;

"AIRC" means the Australian Industrial Relations Commission;

"APS" means the Australian Public Service;

"APS Enterprise Agreement" means the Continuous Improvement in the APS Enterprise Agreement : 1995-96;

"Award" means the APS General Employment Conditions Award 1995 (Print No M8993);

"Classification award" means an award of the AIRC that establishes a classification structure and rates of pay within the APS;

"Commissioner" means the Public Service Commissioner, or delegate or person authorised. (Where an authority or power is conferred on the Commissioner under this Award it will be read that this authority or power rests with the Presiding Officer(s) or delegate of the Presiding Officer(s) in respect of the Parliamentary Departments);

"DIR" means the Secretary, Department of Industrial Relations, or delegate or person authorised. (Where an authority or power is conferred on DIR under this Award it will be read that this authority or power rests with the Presiding Officer(s) or delegate of the Presiding Officer(s) in respect of the Parliamentary Departments);

"employee" includes "officer" and "employee" whether full or part-time as defined in the Act. For the purposes of the R&R provisions an employee does not include an officer whose appointment to the Service on probation has not been confirmed, a Secretary, unattached Secretary or a Senior Executive Service officer; and does not include an employee under Division 10 of Part III of the Act other than a continuing employee who has been an employee for more than one year;

"EWANO" means employees who are not officers. For the purposes of the R&R provisions an EWANO is a continuing employee as defined in Division 10 of Part III of the Act who has been an employee for more than one year;

"excess employee" means an employee who is excess within the meaning of subclause 11.1 of the Award;

"involuntary retirement" means the retirement of an excess employee under section 76W of the Act in accordance with subclause 11. 5 of the Award;

"officer" has the same meaning as in the Act;

"PSMPC" means the Public Service and Merit Protection Commission;

"potentially excess employee" means an employee who is likely to become an excess employee;

"R & R provisions" means Clauses 11 and 12 of the Award;

"reduce in classification" has the same meaning as in section 76T of the Act and includes, in relation to an employee, employing that employee in a lower capacity;

"Secretary" means a person for the time being performing the duties of an office of Secretary as defined in the Act, and includes a delegate of the Secretary or a person authorised for the purpose by the Secretary;

"severance benefit" means the benefit payable in accordance with paragraph 11.4.7 of the Award;

"staffing structure" means the number and classification of employees and the extent of temporary assistance which a Secretary considers necessary for the efficient and economical operation of an agency or a work area within it;

"surplus employee" means an employee who is likely to become an excess employee;

"union" means a union party to this Award, and where appropriate, includes the relevant national union official or nominated representative;

"voluntary retrenchment" means the retirement of an excess employee under section 76W of the Act and in accordance with subclause 11.4 of the Award; and

"work area" or "workplace" means a Division, Branch or other organisational unit within an agency.

Good Practice - Application

Excluded employee

The R&R provisions do not apply to probationers or to fixed-term and short-term employees. The provisions do not apply to continuing employees with less than one year's service.

Probationers who are excess may have their probationary appointment terminated under section 47 of the Act. (Refer to PSMPC publication Probation - Principles, Guidelines and Good Practice).

Fixed-term and short-term employees can be terminated at any time under section 82AH of the Act. However, any termination of employment should comply with the relevant provisions of the Act and also with the requirements of the Industrial Relations Act 1988 (the IRÊAct).

Continuing employees with less than one years' service who are excess can also be terminated under section 82AH of the Act, having regard to the provisions of the IR Act.

The R&R provisions do not apply to a Secretary or a member of the Senior Executive Service (SES). The redeployment and retirement of a surplus SES officer is covered by sections 76L and 76R of the Act.

Good Practice - Discussion with Unions

Requirement to discuss with unions

When a Secretary is aware that there is likely to be an excess staff situation, the National Secretary of the relevant union should be advised as soon as practicable unless other arrangements have been agreed between the Secretary and union.

The discussions under the R&R provisions should concentrate on the management of the excess staff situation. The purpose is not to debate the merits of Government decisions, or to go over initiatives or measures that have been the subject of consultation with the relevant unions in another forum. However, unions should be given the opportunity to put their views on any proposed changes to the staffing structure of an affected work area before the structure is finalised. (Agencies should note that they must comply with any obligation to consult unions about the development and implementation of workplace changes contained in their agency-specific agreements or under agreed consultative arrangements).

The aim should be, where practical, to resolve potential excess staff situations without the need for retrenchment, and employees likely to be affected by an excess staff situation should, where appropriate, be reassured of this intention.

It is important however, that employees and unions be given realistic and honest advice about the redeployment prospects of the affected employees.

Details to be provided to unions

The details provided to the union must include the number and classification of affected employees. The further details required under sub-paragraph 11.3.2(b) include the names and location of the affected employees and, where appropriate, would include details of their sex; age; length of service; and employment status (permanent or temporary, full-time or part-time).

To avoid any disputes over the date the union receives the relevant details, a Secretary could send them to the National Secretary of the relevant union by facsimile or registered mail.

Matters to be discussed

Discussions with the relevant union may cover any issues related to the strategy for managing the excess staff situation, but must include discussion of the measures that could be taken to remove or reduce the incidence of employees becoming excess; the redeployment prospects for employees; the appropriateness of voluntary retrenchment; and the method to be used to identify excess staff.

Options for determining which staff are to be declared excess

The Award does not set out the processes for deciding which individuals from amongst a group of staff affected by an excess staff situation should be formally declared excess or offered voluntary retrenchment. There is a substantial amount of flexibility for Secretaries to determine the process to be followed.

In any situation where retrenchments are going to be necessary, the voluntary retrenchment system offers the means of obtaining a termination process once staff give their consent. By this means, the slower, costlier and dispute-prone procedures leading to involuntarily retrenchment can be avoided.

Circumstances will vary from agency to agency, but important factors to be considered by a Secretary are the efficient and economical working of the agency, including the need to meet budget targets; the need for an agency to be able to effectively deliver on its corporate goals; fairness and equity; and due process.

Because of the wide variety of circumstances that can lead to an excess staff situation, it is not possible to be prescriptive about the processes to be followed in all situations: different processes will fit different circumstances. However, the range of methods of identifying staff to be declared excess could include the following:

If there is a restructure of the agency

• it may be appropriate to spill all of the positions in the affected part(s) of the agency, and to fill the positions in the new structure by the transfer of staff at level. If there are more staff than positions, then those who miss out on merit transfer would be declared excess or offered voluntary retrenchment; or
• it may be appropriate to fill jobs in the new part of the structure which have not substantially changed their content with the occupant of the same position in the old structure, and to open up for merit transfer only those positions which have substantially changed.

Where there is an across-the-board cut in the agency's running costs

• management may wish to develop a revised staffing profile for the organisation. This would clearly show how many staff are required at each classification level, and make it clear how many staff are likely to become excess to requirements at each level.
• a merit process could be developed, where practicable, to determine those staff to be transferred at level to positions in the organisation. This process need not be the same as a full-blown merit selection for promotion, but the criteria for selection should be clearly spelled out to staff; staff should be given the opportunity to answer any allegations (or adverse comments) about their performance; and the process should be well documented - (A recent decision of the Industrial Relations Court (the Submarine Corporation case) makes it clear that it is open to management to use work performance as the basis for deciding who is to be retrenched. But it is clear from this decision that if work performance becomes a reason for selecting a person for retrenchment, then the provisions of the IR Act, particularly section 170DC, come into play. If work performance criteria are used for deciding that an employee is to be identified as excess, the criteria should be clear and be made known to the affected staff; and the affected employee must be given the right to defend themselves against allegations made about their performance. Finally the case makes it clear that in these situations, the employer carries the onus of showing there was a valid reason for the selection of each employee identified as excess on this basis); or
• where large numbers of staff are potentially excess, agencies may wish to consider using independent convenors of the PSMPC to develop an order of ranking, on a fee-for-service basis. While these convenors are staff of the PSMPC they can act as independent convenors under the Merit Protection (Australian Government Employees) Act 1984.; or
• through consultation with staff and unions, an agency may conclude that is appropriate to develop another strategy for identifying the staff likely to become excess to requirements at each level in order to achieve the necessary savings.

Abolition of a function

Where particular functions of an agency are to be abolished, the staff performing the function who cannot be transferred to a suitable position elsewhere in the agency will be the excess staff.

Substitution

Subparagraph 11.4.12.(b) of the Award permits a Secretary to substitute employees not affected by the redundancy situation who are interested in voluntary retrenchment for employees in an affected area who have rejected voluntary retrenchment, where the affected employee is suitable for the other position.

Expressions of interest in voluntary retrenchment

Management may wish to seek expressions of interest from the staff in the affected area, or in some cases, across the agency. Elections will usually be invited from affected work areas only, in the first instance. The question of whether some or all of the employees in an affected work area (or employees outside that area) are invited to submit elections will depend on factors such as the size of the redundancy problem and on whether, for operational reasons, the Secretary decides in advance that particular employees will not be invited to submit elections for retrenchment. There are circumstances where it is appropriate to seek expressions of interest from staff within an affected area, for example, where staff are carrying out similar duties and generally have similar levels of skills and experience. It is often done on an agency-wide basis because it is seen as an easy option. However, it needs to be borne in mind that such an approach can have adverse effects. It can create the impression that the process is not being firmly managed, and additionally that the whole of the downsizing process will be managed on a completely voluntary basis.

This approach has a number of disadvantages. It is likely some of the agency's best staff will express interest: agencies experience has been that the best performers are often the people most interested in voluntary retrenchment. If there is an insufficient number of staff expressing interest in voluntary retrenchment it becomes difficult for management not to agree to offer voluntary retrenchment to all who have expressed interest; and in any case, if the numbers expressing interest do not match the numbers of staff reductions required (whether there are too many or too few), some other process will have to be put into place to determine who is to be offered voluntary retrenchment or to become excess. There is also the possibility of large numbers of grievances, if there is an over supply of expressions of interest, from staff who are not ultimately offered voluntary retrenchment, and the effect of that on the performance of those staff. The perception that voluntary retrenchment will be available generally within an agency could lead to a reduction in the agency's attrition rate.

Structures and Profiles

Approaches to identifying excess staff which are built around functions, or structures, or new staff profiles will narrow down the field of affected staff and may achieve better outcomes in the long run, and be less disruptive for staff in non-affected areas. It is acknowledged however, that these processes may be unsettling or disruptive for staff in the short-term. Areas to be affected should therefore be identified as clearly as possible.

Whatever approach is adopted, agencies need to give careful consideration to the needs and morale of staff who remain with the agency, and to the effective operation of the organisation after the downsizing.

Discussion period

A Secretary cannot make a formal offer of voluntary retrenchment or advise an employee that he or she is an excess employee:

• within one month of the Secretary formally advising the union of the excess staff situation; and
• until the discussions with the union have been completed unless the Commissioner determines that the discussions have not proceeded with reasonable timeliness and it is appropriate to proceed.

Good Practice - Voluntary retrenchment

Redeployment the first option

In all excess staffing situations, redeployment should be the first option explored. Paragraph 11.4.1 of the Award states that the Secretary will take reasonable action to assess the redeployment prospects of excess employees before offering voluntary retrenchment. Reasonable action could include referring the employee's details and work experience to other relevant agencies and requesting those agencies to consider the employee for suitable vacancies and keeping the excess employee aware of suitable vacancies in the APS.

Invitation to elect to be retired

Decisions on who will be made an offer of voluntary retrenchment should be management driven rather than staff initiated. Subject to the completion of the discussion phase with the relevant union outlined above, the Secretary may invite employees to elect to be voluntarily retired to achieve the staff reductions required.

Decisions on who of those who have elected to be retired will be retired are a matter for the Secretary. These decisions would normally be made on the basis of operational requirements and an assessment of relative efficiency.

The following points should be incorporated into the written invitation to employees to elect to be voluntary retired:

• that it is a formal invitation under the Award;
• that the invitation will not be repeated;
• the employee has one month in which to advise the Secretary of an election. Failure to respond to the invitation will be taken to mean that the employee has declined the invitation;
• the employee will become excess, if they have not already been declared excess, one month from the date of the invitation and the retention period will commence on that day;
• information on the action that could be taken to retire the employee, with the approval of the Commissioner, if it is unlikely that the employee can be redeployed before the end of the retention period; and
• the Secretary has the right to refuse, on operational grounds, any election to be retired.

Employees on long term leave

Voluntary retrenchment should not be offered to staff who are on leave without pay. The prospects for redeployment of an employee on leave without pay cannot be reasonably assessed by the Secretary while the employee is absent from the workplace. An employee on LWOP, including employees who are working with an organisation under Division 2 of Part IV of the Act (Mobility Provisions), is not excess to requirements and should not be invited to elect to be voluntarily retired until they return to work and an assessment of their prospects for redeployment has been made.

Employees who are not fit for and are not at work

Where an employee is not fit for and not at work an offer of voluntary retrenchment should not be made unless the issue of continuing Commonwealth liability has been resolved. Refer to Attachment B for details on the processes involved in handling an employee who is not fit for and is not at work.

Election period - one month

The Award provides that an employee who has been invited to submit an election to be retired will have one month to advise the Secretary of his or her decision.

Although the actual election may be submitted before the end of the month, no election should be approved until the month is up. This ensures that approvals are seen to be given fairly and with regard to operational requirements - not on the basis of "first come, first served" - and to guard against employees making hasty or uninformed decisions. If no election is received in the one month period then it should be taken that the employee has declined the offer. The one month period for consideration of the offer is not extended by periods of sick leave.

The effect on an employee who declines an offer of voluntary retrenchment and who has not previously been formally notified that he or she is excess is that their retention period commences on that day (one month after the offer is made) and accordingly they should be immediately referred to APSLMAP for redeployment assistance.

Advice to be provided to an employee during the election period

An employee considering an offer of voluntary retirement will need, and must be given access to advice on the amounts of money he or she will receive and on taxation and superannuation matters. This should happen as early as practicable to enable a decision to be made during the election period.

Secretaries should seek written advice from ComSuper on the arrangements applying to individual excess employees and, as appropriate, from the Australian Taxation Office.

The taxation arrangements, for example, for an employee whose services cannot be effectively used because of technological or other changes in the work methods of the agency or changes in the nature, extent or organisation of the functions of the agency (subparagraph 11.1.1(b) of the Award) may be different because this may not constitute a bona fide redundancy (see information provided to agencies on 22 August 1994 concerning Taxation Ruling 94/12).

The Australian Taxation Office should be contacted for specific advice if there is any uncertainty about the taxation treatment of benefits payable to an employee.

Approving elections for voluntary retrenchment

The Secretary has the right to refuse any election for voluntary retrenchment by an employee. This would normally be for operational reasons. It is vital that decisions to approve or refuse elections to be retired be made as quickly as possible after the election has been made.

Notice of retirement

When an election to be retired is approved by the Secretary, the Secretary must give the employee notice of retirement under subsection 76W(1) of the Act (see Attachment A for a copy of 76W(1) of the Act) for the retirement to take effect. Before the notice is given, the employee's consent in writing to the giving of the notice must be obtained, and the date of effect for the notice should be settled.

Date of effect of the notice of retirement

The date of effect of the notice of retirement will be:

• the end of the period of notice as set out in 11.4.4; or
• where the Secretary directs or the employee requests an earlier retirement date within the period of notice, that earlier date.
  - Payment instead of notice must be made where an employee is retired before the end of the notice period (see the section on Payment instead of notice).

Payment instead of notice

Where a notice period is foreshortened, either by the Secretary or the employee, the employee is entitled to compensation for the unexpired portion of the notice period. The payment instead of notice provisions in the Award are the same as those in the IR Act. Further information on the amount payable is included at Attachment E.

Reasons for foreshortening the notice period

Neither the employee or the employer is required to give reasons for the decision to foreshorten the notice period.

Employees may wish to foreshorten the notice period for personal or other reasons, including the opportunity to take up alternative employment.

Managers may wish to foreshorten the notice period where, for example, the workplace is being closed down, the work previously performed is no longer required to be performed or the employee cannot be gainfully employed during the notice period.

Agency Workplace or Enterprise Agreement - No negotiation on severance benefits

Under the APS Enterprise Agreement, the essential elements of the redeployment and retirement arrangements are to be maintained (see Clause 2 of the APS Enterprise Agreement). The amount of severance benefit which is payable under the Award is a Service-wide standard and cannot be altered or enhanced by an agency. Under the current processes of the IR Act, the APS Enterprise Agreement will remain in place unless a new agreement is negotiated.

Severance benefit

An employee who is voluntarily retrenched is entitled to be paid a sum equal to 2 weeks salary for each completed year of service, plus a pro rata payment for completed months of service since the last completed year of service, calculated up until the end of the notice period prescribed under 1.1.4.4. The minimum sum payable as a severance benefit is the equivalent to 4 weeks salary and the maximum is 48 weeks salary.

For earlier periods of service to count as service for severance pay purposes, there must be no break in service, except as provided for in subparagraph 11.4.7(a) of the Award.

Part-time staff

The severance benefit will be calculated on a pro rata basis where an employee has worked part-time hours during the period of service and the employee has less than 24 years of full-time service. Further information on the calculation of the severance benefit for part-time staff is at Attachment F.

Service not to count as service for severance pay purposes:

Any period of service which ceased as a result of:

• retrenchment;
• retirement on grounds of invalidity;
• inefficiency or loss of qualifications;
• forfeiture of office;
• dismissal;
• termination of probationary appointment for reasons of unsatisfactory service; or
• voluntary retirement at or above the minimum retiring age applicable to the employee or with the payment of an employer-financed retirement benefit will not count as service for severance pay purposes.

Service in Australian Defence Forces

Where a member of the Australian Defence Forces (ADF) has voluntarily retired from the ADF with an employer-financed retirement benefit, the period of service with the ADF should not be counted as service for severance pay purposes as it is voluntary retirement 'with the payment of an employer financed retirement benefit'.

Employees deemed to have retired under the marriage bar

Advice on the calculation of service for severance pay purposes of staff who were deemed to have resigned from the APS on marriage under the repealed section 49 of the Act is contained in Attachment G.

Salary for severance pay purposes - allowances

For an allowance to be considered as salary for severance pay purposes it will have been paid on a regular (i.e. fortnightly) basis and not be a reimbursement for expenses incurred or a payment for disabilities associated with the performance of duty. Some agency specific workplace agreements include certain allowances as salary and these agreements will need to be taken into account when calculating a severance benefit.

Superannuation

In addition to severance pay, employees who are superannuation contributors have a number of options in relation to their superannuation entitlements. Advice on these options should be sought from ComSuper.

Long service leave and recreation leave

The Long Service Leave (Commonwealth Employees) Act 1976 provides for payment in lieu of accrued long service leave for employees who are retrenched. The qualifying service for this purpose (see Order 5/G/4 in Volume 8 of the Personnel Management Manual) is more than 10 years, and payment on a pro rata basis is made where service is more than 1 year but less than 10 years.

The standard provisions for payment in lieu of recreation leave, including leave bonus on separation from APS employment, apply.

Voluntary retrenchment of staff engaged in the same work before involuntary retirement

A Secretary must not involuntarily retire an employee if there are other employees at the same level, doing the same work in that workplace who have accepted an invitation to take voluntary retrenchment and the Secretary has refused to retire those employees.

Substitution

Subparagraph 11.4.12.(b) of the Award permits a Secretary to substitute employees from outside an affected area who are interested in voluntary retrenchment for employees in an affected area who have rejected voluntary retrenchment.

Decisions on substitution should be made on operational grounds and on the basis of the retained employee being able to effectively carry out the duties of the substituted employee.

Good Practice - Retention periods

Length of the retention period

The age and length of service of an employee on the day the retention period commences determine the length of the employee's retention period. Therefore, an employee who turns 45 or completes 20 years of service after the retention period has commenced is not entitled to have the retention period extended from 7 to 13 months.

The retention period may be extended for certain absences during the retention period - see the good practice advice on sick leave during the retention period.

Commencement of retention period

The retention period commences either:

• as a result of an employee being notified they are excess; or
• one month after the employee is formally offered voluntary retrenchment (failure to respond to the offer means that the employee has declined the invitation).

An employee who has been declared excess and seeks redeployment or who has rejected a formal offer of voluntary retrenchment must be referred to APSLMAP for redeployment assistance.

Good Practice - Redeployment

Redeployment of excess staff

During the retention period the Secretary must continue to take all reasonable steps, consistent with the interests of the efficient administration of the agency, to transfer excess employees to suitable vacancies of equal or lower classification within the agency.

Reasonable steps could include giving excess employees first consideration for placement opportunities as they arise, such as considering them for placement in long-term temporary vacancies which might otherwise be filled by higher duties, or in the place of temporary employees where this action is likely to lead to a permanent position.

Employee successfully redeployed

Where an excess employee is successfully redeployed (that is, placed in a permanent position) he or she is no longer an excess employee and all associated processes under the R & R provisions cease.

If the employee becomes excess again, the excess staff process should be started again in relation to that employee.

Retraining of excess employees

To enhance the redeployment opportunities of excess staff, it is open to Secretaries to arrange for their retraining. Retraining will usually take the form of on-the-job training but could include, in some cases, the undertaking of a short course to provide new skills or update existing ones. It should be tailored closely to the employment outlook for the employee.

Transfers between different classification groups

Under the APS Enterprise Agreement, a number of classifications with very similar salaries have been grouped together and movement between them which in some cases would otherwise be a promotion, is to be treated as a transfer for the purposes of redeployment of excess employees. An excess employee who holds a position within one of these classification groups is regarded as having applied for a transfer where they apply for a vacant position within the same classification group. They will be considered in isolation from and not in competition with other applicants for that position.

Transfers under section 51 of the Act

The Commissioner has the power under section 51 of the Act to transfer employees from one agency to another at their level where he is satisfied that this is necessary in the interests of the efficient administration of the Service. This power is available to redeploy excess employees in appropriate cases.

It should be noted that the powers under section 51 will be used in a facilitative way to transfer an excess officer where it is in the interests of the APS to do so and the officer's suitability is demonstrated.

Under the provisions of section 51, the Commissioner would expect to transfer an excess employee to a position at or below the employee's level in another agency where the employee is expected to be able to perform the duties of the position efficiently, either immediately or within a reasonable period, unless, in exceptional circumstances, the agency is able to demonstrate to the PSMPC that it is essential the position in question be filled by the most efficient applicant.

What is a "reasonable period" will vary, but it is generally accepted as being a period of three months. In some circumstances, it may be reasonable to allow a period of up to six months.

Appeals against non-selection for transfer

Where an excess employee has applied for an advertised vacancy equal to or lower than his or her substantive classification and a person is promoted to that position, if that promotion is an appellable one, then the excess employee has a right of appeal against the promotion, under section 50H of the Act - see the section on Good Practice - Appeals on pages 61 and Attachment A for further information.

Consideration of an excess employee in isolation from and not in competition with other applicants

Where an excess employee seeks transfer to an advertised vacancy, the agency advertising the vacancy will consider the excess employee in isolation from and not in competition with other applicants. If the excess employee is capable of performing the duties of the position immediately or within a reasonable period, the excess employee should be transferred into the vacancy.

What is a "reasonable period" will vary, but it is generally accepted as being a period of three months. In some circumstances, it may be reasonable to allow a period of up to six months.

Reduction in classification

In cases where transfer at level is unlikely to occur, for example because of the location or specialisation of the excess employee concerned, Secretaries could consider redeployment to a position at a lower level.

Any reduction in classification should be to duties for which the employee is qualified, which he or she could perform efficiently either immediately or within a reasonable period, and which the employee could reasonably be required to perform. In relation to permanent staff, any reduction by the Secretary must be to a vacant position. A Secretary may not transfer an excess employee who is an officer to a lower level as an unattached officer (see Attachment A for a details of section 76T of the Act).

The Commissioner is also able to reduce an excess employee's classification.

An employee who is reduced in classification during the retention period is entitled to receive income maintenance payments for the balance of what would have been the retention period.

Reduction in classification with the consent of the employee can occur at any time during the retention period. This can occur under section 50 of the Act or by the Secretary giving notice under subsection 76W(1) of the Act. The employee's prior written consent to the reduction should be obtained. Before an employee gives consent to reduction, he or she should be advised of the effect that this may have on particular conditions of service and superannuation contributions and benefits. The notice of retirement takes effect on the date specified in the notice and agreed between the Secretary and the employee.

If the Secretary and the employee do not agree in advance on the reduction, the case should be treated as a reduction without consent.

A proposal to reduce an excess employee in classification without the consent of the employee must first be referred to the PSMPC. Under the Award and the Act a reduction without consent can occur only where:

• the Secretary has been unable to find suitable alternative employment for the excess employee at the employee's level in the Secretary's agency, and
• the Commissioner is satisfied that it would not be in the interests of the efficient administration of the Service to transfer the employee at level to another agency.

Where these requirements have been fulfilled, the Secretary may give the employee notice of reduction under subsection 76W(1) of the Act. The notice must include or be accompanied by a statement of the reasons for the notice and of the employee's right of appeal.

Where an employee has not given prior written consent to the giving of notice of reduction in classification, the notice takes effect:

• one month after the day the notice is given to the employee;
• if the Secretary specifies a day that is later than one month after the day the notice is given to the employee - on that day; or
• if the employee appeals, the day on which the appeal is disallowed or withdrawn;

whichever occurs last.

A notice of reduction of classification must be in writing. Elements that could be included in the notice of reduction are at Attachment D.

Good Practice - Involuntary retirement

Involuntary retirement

Under section 76W of the Act a Secretary has the power to involuntary retire an excess employee at the end of the retention period with the consent of the Commissioner.

Involuntary retirement should be carried out in a timely manner. The Federal Court in the decision outlined in Attachment H, found that the retirement of an excess employee three years after being declared excess was beyond power and not valid.

Under subclause 11.5 of the Award a Secretary can involuntarily retire an excess employee only:

• at the end of the retention period;
• if the employee has been formally given the opportunity to elect for voluntary retrenchment and has not taken it up;
• if there is no suitable alternative employment for the employee in the agency;
• if the substitution provision at sub-paragraph 11.4.12(a) of the Award does not operate; and
• if the Commissioner has approved the proposal to give notice of retirement.

Notice of retirement

When a Secretary concludes that an excess employee is unlikely to be redeployed by the end of the retention period, the Secretary should give the employee notice of retirement under subsection 76W(1) of the Act. The notice should be given no less than one month (or five weeks where an employee is over 45 years with at least 5 years continuous service) before the scheduled end of the retention period.

If redeployment arrangements can be made before the end of the retention period but the employee will not actually be redeployed until after that period ends, a notice of retirement should not be given or, if it has been given, should be withdrawn.

Retirement must be cleared with PSMPC

Any proposal to give notice of retirement without the prior written consent of the employee must be referred to the Commissioner.

The effect of subsection 76W(2) of the Act and paragraph 11.5.5 of the Award is that the retirement can occur only where:

• the Secretary has been unable to find alternative suitable employment for the excess employee in the Secretary's agency, and
• the Commissioner is satisfied that it would not be in the interests of the efficient administration of the Service to transfer the employee under section 51 of the Act to another agency.

Approval from the Commissioner is not required where the employee consents to retirement during, or at the end of, the retention period.

Information to be included in a notice of retirement

See Attachment D for elements that could be included in the notice of retirement.

Date of Effect

The APS Enterprise Agreement provides that a notice of termination should takes effect at the end of the prescribed period of 28 days (or 5 weeks in the case of employees over 45 with at least 5 years continuous service).

The date of retirement is not altered by an employee lodging an application that the retirement was unlawful with the Australian Industrial Relations Commission.

Entitlements on involuntary retirement

Employees who are involuntarily retired under section 76W of the Act are entitled, on retirement, to receive the same superannuation and leave payments as are payable to an employee who accepts voluntary retrenchment.

The employee, however does not receive the severance benefit payable to an employee who accepts voluntary retrenchment.

Appeal Rights

Under the APS Enterprise Agreement, an employee who is retired under section 76W without their consent can no longer appeal to a Redeployment and Retirement Committee. The only avenue of review is an application that the termination was unlawful, to the Australian Industrial Relations Commission (AIRC).

The date of retirement is not altered or delayed by an employee lodging an application with the AIRC.

Good Practice - Preference

Preference to union members

Subclause 11.6 of the Award provides preference in retention in employment to union members, when a notice of retirement is being given. It applies to employees who have not consented to the giving of the notice of retirement. It operates only in the event that a suitable vacancy occurs within the agency which would permit retention in employment of an employee and it is not possible to select between two excess employees on the basis of relative efficiency.

Good Practice - Income maintenance

Income maintenance following reduction

An employee who is reduced in classification during the retention period is entitled to receive income maintenance payments for the balance of the retention period. This applies whether the reduction is voluntary or involuntary and whether it is effected by the Secretary or the Commissioner (paragraph 11.5.10 of the Award).

Definition of income maintenance

Income maintenance payments are the amount of money payable from time to time to bring the employee's new salary up to the salary being received as at the date the excess employee is notified that he or she is excess or at the date of an excess employee's reduction in classification (paragraph 11.7.1 of the Award). Income maintenance is not updated, e.g. for salary increases.

Income maintenance payments are to be calculated in accordance with subclause 11.7 of the Award.

Good Practice - Leave and expenses to seek employment

Leave and expenses to seek other employment

During the retention period employees are eligible for reasonable leave and expenses to seek employment, in accordance with sub-clause 11.8 of the Award. This could include paid leave to attend interviews and reimbursement of reasonable travel costs to attend interviews not met by a prospective employer.

Good Practice - Leave and expenses to seek employment

Relocation expenses if redeployed

An excess employee if redeployed to a different locality is entitled to reasonable costs associated with relocation in line with the arrangements that apply to an employee who relocates as a result of a promotion.

Good Practice - Sick leave during the retention period

Extension of retention period

All excess employees should be afforded a reasonable opportunity to secure redeployment. Efforts to secure redeployment can be affected by an employee's absence due to illness or injury arising from certificated sick leave or approved compensation leave and therefore their retention period is extended by all such leave taken during the retention period.

In these circumstances, an excess employee cannot reach the end of their retention period until the necessary adjustments have been made for absences occurring during the retention period. At the end of the adjusted retention period a Secretary may involuntarily retire an excess employee in accordance with the requirements of section 76W of the Act.

It should be noted that the one month period for consideration of the offer of voluntary retrenchment is not extended by periods of sick leave.

Certified sick leave

Agencies will need to refer to their own workplace bargaining agreements to determine what absences are considered to be certified sick leave.

Maternity leave and other leave

The retention period may also be extended by maternity leave, but not by any recreation leave or long service leave that is taken, unless in the view of the Secretary there were compelling reasons for such leave to be taken and the employee's absence on leave has affected his or her efforts to obtain redeployment.

Good Practice - Appeals

Appeal rights where an excess employee has applied for an advertised vacancy equal to or below level.

Where an excess employee has applied for an advertised vacancy equal to or lower than his or her substantive classification and a person is promoted to that position, if that promotion is an appellable one, then the excess employee has a right of appeal against the promotion, under section 50H of the Act. Such an appeal may be lodged with the Merit Protection Commissioner. Section 50H of the Act is at Attachment A.

Appeal rights where an employee has been reduced in classification without consent

An employee who is given notice under section 76W of the Act of reduction in classification and who has not given prior written consent to the giving of the notice may appeal under section 76Z of the Act to a Redeployment and Retirement Appeal Committee. Information on the powers on the Redeployment and Retirement Committee is at Attachment I. The ground of appeal is that the reduction would be unreasonable.

An appeal must be in writing and must reach the Merit Protection Commissioner within 14 days of the day the employee received the notice. Where an appeal is lodged, the notice does not take effect unless the notice is confirmed or the appeal is withdrawn. If the notice is revoked by the Committee, then the reduction does not occur.

Appeals in relation to benefits

There is also a right of appeal under sub-clause 11.11 of the Award in relation to decisions about benefits under sub-clauses 11.7 to 11.10 inclusive of the Award.

Applications to seek remedy for termination of employment

Under the APS Enterprise Agreement, an employee who is retired under section 76W without their consent can no longer appeal to a Redeployment and Retirement Committee. The only right of appeal is for an employee to make an application to the AIRC if he or she believes the termination was unlawful.

The date of retirement is not altered by an employee lodging an application with the AIRC. A notice of retirement takes effect at the end of the notice period unless foreshortened by either party. The PSMPC can provide advice if the AIRC or the Industrial Relations Court directs that an employee is to be re-appointed or reinstated to the APS.

Good Practice - Interaction with other HRM practices

As mentioned earlier in these guidelines, Secretaries should be confident that an employee is an excess employee and would not be more appropriately managed under the Fitness For Continued Duty Instructions, the Loss of Essential Qualifications Instructions, the inefficiency procedures or the discipline procedures. Secretaries should decide which of these is the most appropriate in the circumstances. The PSMPC can provide advice on the management of these processes.

Where the Secretary has commenced action under one of the processes mentioned in the previous paragraph that action should continue and, where appropriate, be completed before action is taken under the Award.

Good Practice - Insufficient work

For the purposes of the Award, an employee who is not an officer is a continuing employee with more than twelve months' continuous service. For a definition of 'continuing employee' see section 82AC of the Act at Attachment A.

Foreshortening of retention period - excess continuing employees

The retention period of an excess employee covered by clause 12 of the Award may be foreshortened by the Secretary after consulting with the Commissioner and the union, if there is insufficient productive work for the employee during the retention period.

Where the retention period of an excess employee covered by clause 12 is foreshortened, the employee is eligible to receive income maintenance payments for the balance of the retention period, calculated in accordance with sub-clause 11.7 of the Award.

The retirement of an excess employee covered by clause 12 is processed under section 76W of the Act, as is the retirement of other excess employees.

Attachment A - Extracts from the Public Service Act 1922

Part III , Division 4 - Appointments, Transfers and Promotions
Subdivision D - Promotions and Transfers of Officers other than Secretaries of Departments and Senior Executive Service Officers

Promotion appeal rights of certain officers

50H. (1) This section applies to an officer who has been told by the relevant Secretary that the relevant Secretary is satisfied that the officer is an excess officer.

(2) An officer to whom this section applies has a right under this section to appeal against the promotion under section 50 of another person to a vacant office the classification of which is equal to or lower than the classification of the office occupied by the officer to whom this section applies.

(2A) Subsection (2) does not apply in relation to a promotion that, under this Act, is not subject to appeal under section 50B.

(2B) An officer is not entitled to appeal against the promotion of a person to a vacant office unless:
(a) the vacancy in the office was notified in the Gazette and the officer had applied for a transfer that would have had the effect of filling the notified vacancy; or
(b) the promotion was made without the vacancy in the office having been notified in the Gazette.

(3) Where an officer to whom this section applies is an unattached officer, the reference in subsection (2) to a vacant office the classification of which is equal to or lower than the classification of the office occupied by the officer to whom this section applies shall be read as a reference to a vacant office the maximum rate of salary applicable to which is equal to or lower than the salary, or the maximum rate of salary, applicable to the officer to whom this section applies as an unattached officer.

(4) Subsections 50B (2), (3) and (4) apply in relation to an appeal under this section as if the appeal were an appeal under subsection 50B (1).

(5) Where an officer to whom this section applies appeals under this section against the promotion of another officer, then, for the purposes of this Act in relation to that appeal:
(a) references in this Act to promotion shall, in relation to the officer to whom this section applies, be read as references to the transfer of the officer; and
(b) references in this Act to an appeal under section 50B shall be read as references to an appeal under this section.

(6) The making of an appeal under this section or section 50B by an officer to whom this section applies does not affect the operation of Division 8C.

Part III, Division 8C - Redeployment and retirement of officers other than Secretaries of Departments and Senior Executive Service officers

Interpretation

76S. (1) In this Division, unless the contrary intention appears:

Appeal Committee" means a Redeployment and Retirement Appeal Committee constituted under Subdivision D of Division 2 of Part II of the Merit Protection Act;

"continuing employee" has the same meaning as in Division 10;

"excess officer" includes a person who would be an excess officer as defined in subsection 7 (3) if references in that subsection to officers included references to persons who are officers within the meaning of this Division;

"fixed-term employee" has the same meaning as in Division 10;

"officer" means an officer, other than a Secretary, an unattached Secretary or a Senior Executive Service officer, and includes a continuing employee who has been an employee for more than one year, but does not include an officer whose appointment to the Service on probation has not been confirmed;

"overseas employee" has the same meaning as in Division 10;

"short-term employee" has the same meaning as in Division 10."

(2) For the purposes of this Division, an officer is inefficient if and only if the officer fails, in the performance of the duties that he or she is required to perform, to attain or sustain a standard of efficiency that a person may reasonably be expected to attain or sustain in the performance of those duties.

(3) Without limiting the generality of the matters to which regard may be had for the purpose of determining whether an officer has failed, in the performance of the duties that he or she is required to perform, to attain or sustain the standard of efficiency referred to in subsection (2):
(a) regard shall be had to:
(i) any written selection criteria or job specifications applicable to those duties;
(ii) any duty statement describing those duties; and
(iii) any written work standards or instructions relating to the manner of performance of those duties; and
(b) regard may be had to:
(i) any written selection criteria or job specifications applicable to similar duties;
(ii) any duty statements describing similar duties; and
(iii) any written work standards or instructions relating to the manner of performance of similar duties.

(4) A reference in subsection (3) to similar duties, in relation to an officer holding an office or included in a Department, is a reference to similar duties that other officers of that Department are required to perform.

(5) For the purposes of this Division, an officer is not qualified to perform his or her duties if and only if, in relation to those duties:
(a) the officer ceases to hold, or becomes unable or ineligible to hold or to use and enjoy, an essential qualification; or
(b) a court, person, authority or body that is competent to do so suspends, cancels, revokes, rescinds or otherwise withdraws an essential qualification held by the officer.

(6) A reference in subsection (5) to an essential qualification, in relation to an officer, is a reference to any statutory, professional, academic, commercial, technical, trade, health or other qualification the holding of which is a prerequisite to the practice of a profession, trade or occupation, the exercise of a right or the performance of a function or duty, being a profession, trade, occupation, right, function or duty that it is necessary for that officer to practise, exercise or perform in the course of his or her employment.

Power to reduce officer's classification

76T. (1) The power conferred by this Division on a Secretary to reduce an officer's classification is a power:
(a) in the case of a person who holds an office, or is included, in the Secretary's Department-to assign the person to an office of a lower classification in the Department; or
(b) in the case of a continuing employee employed in a particular capacity in the Secretary's Department-to employ the employee in a lower capacity in the Department.

(2) The power conferred by this Division on the Board to reduce an officer's classification is a power:
(a) in the case of a person who holds an office, or is included, in a Department:
(i) to assign the person to an office of a lower classification in that or another Department; or
(ii) to declare the person to be an unattached officer of a lower classification or, being an unattached officer, to have a lower classification and, in either case, to direct that the person is included in that or another Department; or
(b) in the case of a continuing employee employed in a particular capacity in a Department-to direct that the employee be employed in a lower capacity in that or another Department.

(Sections 76U and 76V have not been included in this extract as they do not directly relate to excess staffing matters)

Powers of Secretary and Board

76W. (1) Where the relevant Secretary is satisfied of a relevant matter in relation to an officer, the relevant Secretary may, having considered whether it would be in the interests of the efficient administration of the Secretary's Department to transfer the officer under section 50, subject to subsection (2), by notice in writing given to the officer, reduce the officer's classification or retire the officer from the Service.

(2) Where:
(a) a Secretary:
(i) has been unable to find alternative suitable employment for an excess officer in the Secretary's Department; and
(ii) proposes to exercise the power under subsection (1) in relation to the officer; and
(b) the officer has not consented to the exercise of that power;
the Board shall take such action as is reasonable to find alternative suitable employment for the officer in the Service, and the Secretary shall not exercise the power under subsection (1) in relation to the officer unless the Board is satisfied that it would not be in the interests of the efficient administration of the Service to transfer the officer under section 51 to another Department.

(3) Where the Board is:
(a) satisfied of a relevant matter in relation to an officer; and
(b) satisfied that it would be in the interests of the efficient administration of the Service to do so;
the Board may, having considered whether it would be in the interests of the efficient administration of the Service to transfer the officer under section 51, by notice in writing given to the officer, reduce the officer's classification.

(4) The powers conferred on a Secretary or the Board by this section are subject to any applicable industrial award.

(5) A notice given to an officer under this section takes effect as provided by the regulations.

(6) I n this section, "relevant matter", in relation to an officer, means any of the following matters:
(a) that an officer is unable to perform his or her duties, or other duties appropriate to the officer's classification, because of physical or mental incapacity;
(b) that an officer is inefficient;
(c) that an officer is not qualified to perform his or her duties;
(d) that an officer is an excess officer.

(Sections 76WA, 76X and 76Y have not been included in this extract as they do not directly relate to excess staffing matters.

Appeals

76Z. (1) An officer to whom a notice under section 76W has been given (not being an officer who, before receiving the notice, consented in writing to the giving of the notice) may, within the prescribed period after receiving the notice, appeal to an Appeal Committee against the giving of the notice, on the ground that the reduction in the officer's classification, or the retirement of the officer, as the case requires, would be unreasonable.

(2) Where an officer appeals to an Appeal Committee against the giving of a notice, an Appeal Committee shall hear and determine the appeal and may:
(a) confirm the notice; or
(b) revoke the notice.

Part III - Division 10 - Employees

Employment of continuing employees

82AC. (1) Subject to this section, the Secretary of a Department may engage persons as continuing employees in the Department.

(2) A Secretary shall not engage a person as a continuing employee unless the person is engaged in a class of employees declared under section 82AB.

(3) A Secretary shall not engage a person as a continuing employee unless the Secretary is satisfied that the person has the ability necessary for the performance of the relevant duties.

(4) Where:
(a) a person is employed as a continuing employee in a particular class of employees declared under section 82AB; and
(b) the declaration lapses at any time;

the lapse of the declaration does not prevent the continuation of the employment of the person as a continuing employee.

Attachment B - Voluntary retrenchment where an excess employee is not fit and is not at work

When can an offer be made to an excess employee who is not fit for and at work?

When considering whether to make an offer of voluntary redundancy to an excess employee who is not fit for and not at work, consideration needs to be given to protecting the Commonwealth from unnecessary liability arising under workers' compensation legislation or at common law in relation to an illness or injury. Agencies, however, may offer voluntary retrenchment to an excess employee who is not fit for and not at work in the following circumstances.

In compensation cases, where:

• there is little or no likelihood of further improvement in the employee's condition,
• the employee is unable to return to his or her former duties, or to be placed in another suitable position, and
• the agency has sought and obtained written agreement of the delegate in Comcare to an offer of voluntary retrenchment to the employee being made; and

in non-compensation cases, where:

• there is little or no likelihood of further improvement in the employee's condition,
• the employee is unable to return to his or her former duties, or to be placed in another suitable position, and
• the department has consulted with the Australian Government Health Service (AGHS) to establish that invalidity retirement is not appropriate.

2. It continues to be inappropriate to offer voluntary retrenchment in circumstances where an employee is undergoing a graduated return to duty, where the prognosis for the condition is unknown or where the employee may be totally and permanently incapacitated for duty and a request for invalidity retirement has been made but the relevant Superannuation Board has not considered and determined the request.

3. An offer of voluntary retrenchment should not to be made to an excess employee who is absent from duty for minor illness or injury, whether a compensation or non-compensation case, where there is a reasonable prospect of the employee returning to duty. Voluntary retrenchment should only be offered to the employee after they have returned to duty.

4. Agencies are reminded that voluntary retrenchment is management-initiated and it is a matter for the agency to decide, in all case where the above circumstances have been satisfied, whether an offer of voluntary retrenchment is to be made or not.

Check list for deciding whether or not to offer voluntary retrenchment to an excess employee who is not fit for and not at work

5. It is suggested that before making an offer of voluntary retrenchment to an employee absent from work through illness or injury, an agency be satisfied that:

• the employee is an excess employee;
• there is little or no prospect for a return to normal duty or for redeployment to another suitable position;
• Comcare (in compensation cases) has agreed that it would be appropriate for an offer of voluntary retrenchment to be made to the employee or AGHS (in non-compensation cases) has confirmed that invalidity retirement is not appropriate;
• the appropriateness of invalidity retirement has been assessed and any request for invalidity retirement has been considered and determined by the relevant Superannuation Board*; and
• the Commonwealth is not exposed to unnecessary or increased liability arising under workers' compensation legislation or at common law in relation to an illness or injury as a result of the agency offering, and the employee accepting, voluntary retrenchment.

* The existing invalidity retirement arrangements are not affected by these changes and an excess employee who is totally and permanently incapacitated must be given all reasonable opportunity to obtain invalidity retirement.

Impact on other benefits

Payments excluded from Salary for Severance Pay Purposes

6. Salary for severance pay purposes is defined in paragraph 11.4.11 of the Award. In calculating the severance benefits any incapacity payment made under workers' compensation legislation (Comcare benefit) or any partial invalidity pension (superannuation benefit) being paid to the employee is not considered as an allowance under subparagraph 11.4.11(d) of the Award. Where an excess employee was only receiving compensation payments before being formally offered voluntary redundancy, the salary for severance pay purposes would be the salary the employee would have received if they had returned to normal duties.

Further advice from Comcare

Further information can be obtained from Comcare State Offices.

Attachment C - Information provided by Comcare on handling claims for workers' compensation arising out of restructuring processes

Claims for workers' compensation arising out of restructuring processes will be determined on a case by case basis in accordance with the Safety, Rehabilitation and Compensation Act 1988 (SRC Act). As an independent decision maker, Comcare will look at all evidence provided by the claimant and the agency and any other information Comcare considers relevant. The following principles apply to the determination of these claims in relation to assessment of medical conditions, the contribution of employment and the application of the exclusionary provisions.

Medical Condition

Workers' compensation is payable where a person suffers a medical condition materially contributed to by his or her employment. It is generally Comcare's policy that a person must be suffering from a medical condition diagnosed by a medical practitioner in accordance with the Diagnostic and Statistical Manual of Mental Disorders (4th Ed) (DSMIV) or the International Classification of Diseases 10 (ICD10). Compensation is not generally payable where a person is unhappy, distressed or aggrieved by actions taken by an agency but is not suffering from a diagnosed work related medical condition.

Material contribution of employment

When examining the question of material contribution in relation to these claims, Comcare is of the view that restructuring processes are part of the normal employment environment. As such, a claimant would have to demonstrate that the medical condition has arisen as a result of the failure of the employing agency to adopt a reasonable process or through some significant breach in the restructuring process adopted by the agency.

Application of exclusionary provisions

The SRC Act excludes payment of workers' compensation where the medical condition is as a result of the person failing to obtain a benefit in connection with his or her employment. In cases where a person is claiming a condition resulting from failure to obtain a voluntary redundancy this exclusionary provision would be applied. The SRC Act also excludes payment of workers' compensation where the condition results from the failure to obtain a promotion or transfer. This provision may be relevant in claims arising from a redeployment process.

Management of restructure processes

It is possible that liability for workers' compensation for restructuring processes can arise and employing agencies have a duty to care to their employees to manage these processes appropriately and in accordance with the formal framework for the management of excess staff. It is also important for agencies to manage these processes with a view to minimising any stress on individuals.

To assist Comcare in determining these claims, agencies should provide employer statements with the claim that detail the processes adopted by agencies in their restructuring exercises and any other information relevant to the claim.

Appeals process

An agency or claimant unhappy with a determination made by Comcare can request a reconsideration by an internal review employee of the original decisions. Should the agency or claimant be unhappy with the decision of the internal review employee, an application may be made to the Administrative Appeals Tribunal for a review of that decision.

Comcare will be issuing advice to agencies on the determination of these claims and the arrangements for offering redundancy to people already claiming workers' compensation.

Further information can be obtained from Comcare State Offices or the Stress Claims Management Centre.

Attachment D - Elements that could be included

The following information should be provided in writing to an employees and may be included in the notice issued under section 76W of the Act.

Retirement

• that the employee is being retired under section 76W of the Act;
• the date of effect of retirement;
• that the employee is excess within the meaning of sub-clause 11.1 of theAward;
• that the agency has considered whether it would be in the interests of the efficient administration of the agency to transfer the employee under section 50 of the Act;
• that written consent has been received from the affected employee. If not, a statement of reasons for the retirement must be provided;
• the employee's rights of appeal against the giving of the notice of retirement is given without the employee's consent.

(Where the retention period is foreshortened under clause 12 a statement should be included about the availability of productive work during the unexpired portion of the retention period).

Reduction in classification

• that the employee is being reduced in classification under section 76W of the Act;
• the date of effect of reduction in classification;
• that the employee is excess within the meaning of sub-clause 11.1 of the Award;
• that the agency has considered whether it would be in the interests of the efficient administration of the agency to transfer the employee under section 50 of the Act;
• that written consent has been received from the affected employee. If not a statement of reasons for the reduction in classification must be provided; and
• the employee's rights of appeal if the notice of reduction is given without the employee's consent.

Attachment E - Payment instead of Notice

The provisions of the Industrial Relations Act prevail over the provisions of the Public Service Act, the Public Service Regulations, the APS Agreement and the R&R provisions of the Award to the extent of any inconsistency.

Calculation of payment instead of notice

2. Section 170DB of the IR Act gives an employer the option of giving compensation instead of notice.

3. The calculation of compensation instead of notice is covered by subsections 170DB(4) and (5) of the IR Act. The object of subsection 170DB(4) is to ensure that where the employer does not give the prescribed period of notice the employee is not financially disadvantaged.

4. Advice from the Attorney-General's Department states that the compensation payable under section 170DB(4) is made up of all amounts that the employer would have become liable to pay to the employee had the employee worked through the notice period. That is, if the employer would have been required to pay the employee for benefits accrued during the period of notice, that amount must be included in the payment.

5. The Attorney-General's Department advises that a payment instead of notice under subsection 170DB(4) should include:

• ordinary wages
• anticipated overtime or shift allowances
• other allowances such as senior employee, clothing and site allowances
• accrued recreation leave
• pro rata recreation leave
• long service leave, and
• the employer's superannuation contributions

and these payments should be calculated up until the end of the notice period.

6. Attorney-General's also advises that sick leave credits may not be paid out and are not an amount that would become payable had the employee worked through the notice period. Therefore sick leave would not be taken into account when calculating the amount payable to an employee on termination unless this is explicitly provided for in an enterprise agreement. Higher duties payments and the treatment of salary increments is less clear and would need to be considered on a case by case basis.

Superannuation aspects

7. The above advice indicates that payments instead of notice need to incorporate an amount representing the amount of superannuation that would accrue had the person remained as an employee during the notice period.

8. The determination of superannuation entitlements of APS staff is administered by ComSuper and normally need not be the direct concern of the employing department or agency. However, the Attorney-General's Department advises that; to comply with subsection 170DB(4), the Commonwealth is obliged to pay an amount representing the amount of superannuation that would accrue had the person remained employed during the period. This amount is payable by the Commonwealth through the employing department or agency, and not through ComSuper, and will include an interest component based on the interest that the relevant scheme (CSS or PSS) would have paid during the period.

9. More detailed information on superannuation payments and entitlements can be obtained from ComSuper.

Attachment F - Calculation of the severance benefit for staff with part-time service

Severance pay is to be calculated on a pro rata basis where an employee has worked part-time during any part of the service to be included for severance pay purposes except where the employee has 24 or more years of full-time service. The severance benefit is to be calculated for each period of full and part-time service by multiplying:

• the number of years (and months) of service in each period by 2 (weeks) by salary for the hours worked during the period.

2. The following rules apply in calculating the severance payment for an employee with a period of part-time service:

• the full-time equivalent salary (as defined for severance pay purposes) at date of retirement is used in the calculation of severance benefits for periods of full-time service;
• the employee's salary (as defined for severance pay purposes) at date of retirement, adjusted for the hours worked during the period of part-time service, is used in the calculation of the severance benefit for periods of part-time service;
• the maximum benefit is 48 weeks' salary; and
• where an employee has 24 or more years service any period of full-time service should be counted before periods of part-time service. If an employee's part-time hours varied during their service then those periods involving the higher number of hours should be counted first.

3. Following are some examples to assist you to calculate severance payments:

• An employee with 30 years Commonwealth service, all at full-time, would receive the maximum severance benefit of 48 weeks' salary - 24 (years) x 2 (weeks) x full-time salary.
• An employee with 30 years Commonwealth service, 24 years full-time and 6 years part-time, would receive the maximum benefit of 48 weeks' salary - 24 (years) x 2 (weeks) x full-time salary.
• An employee with 30 years Commonwealth service, 20 years full-time and 10 years part-time (20 hours per week), would receive 20 (years) x 2 (weeks) x full-time salary and 4 (years) x 2 (weeks) x salary for 20 hours.
• An employee with 30 years Commonwealth service, 20 years full-time and 10 years part-time (5 years at 30 hours per week and 5 years at 20 hours per week), would receive 20 (years) x 2 (weeks) x full-time salary and 4 (years) x 2 (weeks) x salary for 30 hours.

Attachment G - Calculation of the severance benefit for staff who were retired under Section 49 of the Public Service Act (The Marriage Bar)

Until the repeal of section 49 of the Act (the Marriage Bar) in 1966, women were retired from the APS on marriage. Women with more than five years service who retired from the APS under this section only received a payment in lieu of long service leave. There was no employer superannuation component paid and there was no opportunity to preserve superannuation benefits on ceasing service. Only a refund of contributions was made. This was a forced break in service on marriage grounds.

2. Consequently, when calculating severance benefits, an employee who was deemed to have retired because of the operation of the former 'marriage bar' and who subsequently re-entered Commonwealth employment should have their service immediately preceding the deemed resignation recognised as service for severance pay purposes. However, for the service to be recognised after the deemed retirement under section 49, all service since the first return to Commonwealth employment must be recognised as service for severance pay purposes. For example:

The severance benefit for an employee with the following periods of service:

• 5 January 1961 to 4 September 1965 (deemed to have retired on marriage)
• 9 October 1975 to the present date
  would be calculated on the total period of actual service (the aggregate of both periods).

3. The severance benefit for an employee with the following periods of service:

• 5 Jan 61 to 4 Sept 65 (deemed to have retired on marriage)
• 9 Oct 75 to 8 Oct 86 (resigned)
• 15 July 90 to the present date
  would be calculated on the service from 15 July 1990 only.

4. The other requirements of paragraphs 11.4.7 to 11.4.10 of the Award must also be satisfied in respect of any period of service whether before or after the deemed retirement.

Attachment H - APS Labour Market Adjustment Program

The APS Labour Market Adjustment Program (APSLMAP) assists with the redeployment of excess and surplus staff in the Australian Public Service (APS).

Under the APS Enterprise Agreement all employees who have been declared excess and are seeking redeployment must be referred to APSLMAP for redeployment assistance.

The program's functions are to:

• encourage and support redeployment initiatives within and between departments and agencies;
• meet the Government's commitments under the APS Enterprise Agreement;
• provide an integrated and consistent approach to the management of excess and surplus staff across the APS; and
• retain for the APS an appropriate level of skilled and experienced staff, including through relevant training and retraining initiatives.

The Program's Careers Advisers are located in Canberra, Perth, Adelaide, Melbourne, Sydney and Brisbane. Other arrangements are in place in Hobart and Darwin to support individual excess and surplus employees in these cities.

Other APSLMAP services include career transition presentations and training for excess staff and agencies, and the provision of skills and awareness training for managers; the provision of information and consultancy services; a special assistance program for small agencies; and a staff search facility.

Fees for the referral of clients from agencies are charged as follows:

• $280 for the referral of an excess employee.
• $420 for the referral of a surplus employee

Attachment I - Federal Court Ruling on powers of Redeployment and Retirement Appeal Committees

The Federal Court decision in Inglis v Cameron (1991) 99 ALR 149 affected the way Redeployment and Retirement Appeal Committees (RRAC's) handle appeals against a notice under section 76Z of the Act.

Background

2. Briefly, the case concerned an employee who had been issued with a notice of retirement under section 76W of the Act. The employee lodged an appeal with the MPRA against this notice and also lodged a grievance concerning aspects of the process leading to the issuing of the notice. The MPRA subsequently advised the employee that it would not investigate the grievance as the issues raised would be considered by the RRAC when the appeal was heard.

3. The employee applied to the Federal Court for a review of this decision and for an order preventing the RRAC from considering the matter until the grievance had been separately determined. The MPRA moved for dismissal of this application on the grounds that, through the RRAC, there was adequate provision for a review of the issues raised in the grievance. Mr Justice Neaves rejected this argument.

What the Court decided

4. In dismissing the MPRA motion, Neaves J found that while an RRAC may have regard to a wide range of material, including material which was not available to the decision maker, the Act does not confer on an RRAC a general power to consider whether or not, in all the circumstances, the employee should be reduced in classification.

What the Court decision highlights:

5. As a result of the decision, you should be aware that:

• an RRAC may not revoke a notice merely because it has reached a different conclusion from that reached by the Secretary;
• an RRAC may revoke a notice if, and only if, it reaches the conclusion, on the material before it, that the reduction in classification would be unreasonable; and
• an RRAC's powers are limited to confirming or revoking the notice issued by the Secretary and it may not substitute its decision for the Secretary's decision by, for example, directing that the employee be reduced in classification, instead of being retired.

6. Agencies should ensure that their representatives on an RRAC is aware of this matter.

Attachment J - Federal Court ruling on delays in handling involuntary retirement cases

The Federal Court decision in Lee v Jacka and Another (1994) 125 ALR 459 affects the decision to retire an excess employee in accordance with section 76W of the Act.

Background

2. The case concerned an employee who was declared excess as part of a wider redundancy program but who did not take up the offer of voluntary retrenchment. Efforts were made to redeploy the employee over almost three years and when no suitable position was found, the employee was involuntarily retired.

3. The employee appealed to a Redeployment and Retirement Appeals Committee (RRAC) on the grounds that the retirement would be unreasonable. While the RRAC criticised aspects of the department's handling of the case, the notice of retirement was confirmed by majority decision.

4. The employee simultaneously took action in the Federal Court, under the Administrative Decisions (Judicial Review) Act, on the grounds that the procedures laid down by law for the making of the relevant decision were not followed.

What the Court decided

5. The Federal Court decision was that, the power to involuntarily retire an employee must be exercised within a reasonable time and that a period of almost three years from the initiation of the relevant process was more than a reasonable time for a decision to retire to be made. Therefore, the decision to retire was beyond the power of the relevant Secretary and the retirement decision was declared invalid.

What the Court decision highlights:

6. The decision highlights the need for agencies to be aware :

• of the arrangements covering the redeployment and retirement of excess staff and to ensure that action taken in relation to excess staff is in accordance with the R&R framework;
• that they should act quickly in relation to an excess staff situation to ensure that the staff know what they must do, what the department will do and to give them the maximum available time to do this;
• any action taken in relation to excess staff should be undertaken within a reasonable time.

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