Overpaid Redundancy $35 million



14 Nov 2014 - In June 2013 the Barnett Government announced that 1000 jobs would go through a round of voluntary redundancies. The Auditor General found that inconsistent processes meant that the State paid more than it should however he was unable to quantify the exact amount.

In total $35 million was paid to employees to cover the notice period.   

Assuming that employees would have been given an average of 2 weeks' notice between being advised of the redundancy and leaving employment the additional cost to State would be $3.5 million. 

In his annual report of financial audits, the Auditor General Colin Murphy found that the failure to give employees the 'written prescribed notice' required under the Public Sector Management (Redeployment and Redundancy) regulations 1994 meant that additional payments were made that could have been avoided. 

Employees are eligible to receive 20 weeks written notice of their redundancy.  Where that notice was not given correctly the employees were eligible to receive a max of 20 weeks' pay in lieu of that notice when they ceased employment.   The amount they would receive would be dependent on when the correct notice was given. 

The Auditor General in his findings at page 22 'Other Financial Reporting and Audit Issues' noted the following issue:

Inconsistent methods were used for calculating redundancy payments. The overall cost to the State could have been lower if written notice to employees had been correctly made in a timely manner.

He further noted:

In most instances, the agency's written notice to the employee did not contain the abovementioned required advice and therefore did not represent 'prescribed written notice' under the Regulations. This resulted in employees being eligible for and receiving the full 20 weeks of pay in lieu of notice. Further, many agencies were tardy in providing written notice to employees. Agencies need to address these shortcomings. P26

The payments made in lieu of notice were calculated to be $35 million.  The Auditor General was unable to identify how much of this was affected. 

The Auditor General has indicated that he was considering a further investigation of this matter. P27