Redundancy pay

Redundancy pay is the severance amount the National Employment Standards require when an employee's job is made genuinely redundant — the role is no longer needed, rather than the person being replaced. It's calculated on a sliding scale of weeks of pay based on years of continuous service, paid at the employee's base rate for ordinary hours, and it sits on top of (not instead of) notice of termination.

Who gets it — and who doesn't

• Small business exemption: employers with fewer than 15 employees generally don't have to pay NES redundancy pay, though notice and other entitlements still apply.
• Short service: employees with less than 12 months' continuous service aren't entitled to it.
• Casuals don't accrue redundancy pay, and some awards have industry-specific schemes that vary the NES scale.

The scale itself is set out in the Fair Work Act and published by the Fair Work Ombudsman — check the current table rather than estimating.

What makes it genuine

A redundancy is genuine when the job is no longer required, any award or agreement consultation obligations were met, and redeployment within the business (or related entities) wasn't reasonable. Get those steps wrong and the dismissal can be challenged as unfair, even if the business reason was real. Handled with honesty and notice, redundancy is hard news delivered decently — and that's worth as much as the cheque.

Fair Work Act 2009 (Cth) ss 119–123 (NES redundancy pay) — scale and exemptions via the Fair Work Ombudsman.

Related terms

• Probation period
• Modern award
• Superannuation guarantee