Awards & Workplace Entitlements
Fewer than 15 employees total.
Estimated Redundancy Payout
$20,042
Based on 11 weeks of pay
Based on your 6.0 years of service, you are entitled to 11 weeks of redundancy pay from a non-small business employer.
Note: This estimate only covers the NES redundancy component. It does not include notice pay, accrued annual leave, or long service leave payouts.
Redundancy occurs when an employer decide they no longer need an employee's job to be done by anyone, or the employer becomes insolvent or bankrupt. In the Australian workforce, redundancy is a strictly regulated process under the National Employment Standards (NES). When a role is made redundant, the affected employee is typically entitled to 'redundancy pay' (also known as severance pay), which is a financial sum intended to bridge the gap while the individual searches for new employment. This payment is a legal right for most permanent employees, but its availability and amount depend on several factors, including the length of time the employee has been with the business and the size of the employer. It is important to distinguish between 'genuine redundancy' and other forms of termination. A genuine redundancy happens when the employer genuinely no longer requires the job to be performed because of changes in the operational requirements of the business, such as new technology, a site closure, or a downturn in trade. If a redundancy is 'genuine,' the employee generally cannot make an unfair dismissal claim. However, if the employer has not followed the correct consultation processes or hasn't considered redeployment within the company, the redundancy might not be legally sound. For Australian workers, redundancy pay serves as a vital acknowledgment of their service and provides a necessary financial buffer during one of the most stressful periods of a professional career.
The baseline for redundancy pay in Australia is set by the National Employment Standards (NES) and follows a sliding scale based on 'continuous service.' Generally, employees with less than 1 year of service are not entitled to redundancy pay. The entitlement starts at 4 weeks' pay for 1 to 2 years of service, increasing to 6 weeks for 2-3 years, 7 weeks for 3-4 years, 8 weeks for 4-5 years, 10 weeks for 5-6 years, 11 weeks for 6-7 years, 13 weeks for 7-8 years, 14 weeks for 8-9 years, and 16 weeks for 9-10 years. Interestingly, the entitlement drops back to 12 weeks for service of 10 years or more, as it is assumed that long service leave entitlements (which usually trigger at 10 years) provide additional support. A critical exception in the Australian system is the 'Small Business Exemption.' Under the Fair Work Act, a 'small business employer'—defined as an employer with fewer than 15 employees at the time of the redundancy—is generally not legally required to pay redundancy pay under the NES. However, some specific modern awards or enterprise agreements may override this and require small businesses to pay a reduced amount. When calculating the dollar value, redundancy pay is based on the employee's 'base rate of pay' for their ordinary hours of work. This excludes incentive-based payments, bonuses, loadings, penalty rates, or overtime. Additionally, the payment is often taxed more favorably than regular income if it qualifies as a 'genuine redundancy' payment, with a significant tax-free threshold applied based on the years of service.
A common point of confusion is why redundancy pay drops from 16 weeks (at 9 years) to 12 weeks (at 10+ years). This was a deliberate policy decision by the Australian Industrial Relations Commission to avoid 'double dipping' between redundancy pay and Long Service Leave (LSL). Since most employees become entitled to ~8.6 weeks of LSL at 10 years, the total combined package for a long-term employee still remains significant, even with the redundancy pay reduction.
If your redundancy is 'genuine,' a large portion of your payout may be tax-free. For the 2023-24 financial year, the base tax-free amount is $11,985, plus an additional $5,994 for every completed year of service. For example, a 5-year employee could receive nearly $42,000 completely tax-free. This can make a redundancy payout significantly more valuable than the same amount paid as regular salary.
In Australia, a redundancy is rarely 'genuine' if the employer hasn't followed the consultation requirements of the relevant award or enterprise agreement. This means they must meet with you, explain the changes, and discuss ways to mitigate the redundancy (such as redeployment to another role). If your employer skips this step, you may have grounds for a claim, even if the business is legitimately downsizing.
If you are told you aren't getting redundancy pay because the company is 'small,' verify the employee count. It must be fewer than 15 employees *across the entire business* (including associated entities and regular casuals). If the company has 20 staff across three different locations, it is NOT a small business, and you are entitled to the full NES payout.
Before accepting a redundancy, ask for a list of all current vacancies within the company or its parent organization. Under Australian law, a redundancy is not genuine if it was 'reasonable in all the circumstances' to redeploy the employee. If there's a similar job available and they didn't offer it to you, your redundancy rights may have been breached.
Redundancy pay is *in addition* to your notice period pay. Don't let an employer lump them together. If you are entitled to 4 weeks' notice and 10 weeks' redundancy, you should receive a total of 14 weeks' pay. Ensure your final termination statement clearly separates these two distinct entitlements.
Liam was made redundant from his tech role after exactly 9 years and 2 months. Under the NES, he was entitled to 16 weeks of redundancy pay—the highest possible amount. Because he hadn't yet reached 10 years, his redundancy pay hadn't 'dipped' to 12 weeks, and he walked away with a $45,000 payout, which was mostly tax-free due to his tenure.
Sarah worked for a boutique architecture firm with 12 staff. When she was made redundant, her employer correctly informed her that as a small business, they didn't have to pay NES redundancy. However, Sarah checked her 'Architects Award' and found a specific clause requiring even small businesses to pay a modified redundancy sum. She secured 4 weeks of pay she otherwise would have missed.
John's role in Melbourne was made redundant, but the company had an identical role open in Geelong. They didn't tell John and instead hired someone new. John was able to challenge the 'genuineness' of his redundancy at the Fair Work Commission, leading to a settlement that significantly exceeded his original 8-week redundancy entitlement.
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