Redundancy occurs when employment is terminated by an employer on specific grounds other than the employee’s performance issues or conduct related issues. Since 1 July 2009, most of the Australian companies and workplaces are governed by the new system created by the Fair Work Act 2009 (the Act).

This page will provide you with some general information about the legal entitlements that employees (in most cases) should receive when their employment is terminated by reason of redundancy. If you have any further questions about redundancy pay, please contact our team of employment lawyers.

Redundancy Pay

Since 1 January 2010, the National Employment Standards (NES) replaced the non-pay rate provision of the Australian Fair Pay and Conditions Standard. According to Section 119 of the Fair Work Act 2009 (the Act), an employee is entitled to receive redundancy pay if the employer terminates the employee’s employment due to:

  • Their own initiative because the employer no longer requires the job to be done by anyone, excepting in case of ordinary and customary turnover of labour; or
  • The employer becomes insolvent or bankrupt.

When it comes to redundancy law and redundancy entitlements, it’s important you are aware of your rights. If you have any questions or concerns, you will need to get into contact with an employee rights lawyer.

Redundancy may occur with an employee if:

  • The business slows down due to lower sales or production;
  • The business is relocated;
  • A merger or takeover happens; or
  • The employer restructured or reorganised the business.

How many weeks’ pay do you get for redundancy?

As per the NES, an employer must provide an employee with a minimum period of notice or payment in lieu of notice before terminating their employment. All employees working under Commonwealth workplace laws are entitled to redundancy payments or severance payments up to a maximum of 16 weeks’ pay under the NES if:

  • They have at least 12 months of continuous service; and
  • They are working for an employer that employs 15 or more employees.

When do employees not receive redundancy pay?

Employees are not eligible to receive redundancy pay on various factors under the NES, which include:

  • The employee’s period of continuous service with the employer is less than 12 months;
  • The employees are employed for a specific period of time or task, or for any specific duration or season;
  • The employment of the employees is terminated due to serious misconduct;
  • The employees are casual employees;
  • The employees are trainees or apprentices; or
  • The employees are eligible to other industry-specific redundancy schemes in a modern award.

Redundancy Payment Table Australia

The amount of redundancy payable to an employee under the NES is determined by using the employee’s base rate of pay for ordinary hours of work. The rate of pay, payable to an employee for ordinary hours of work other than a pieceworker, is known as the employee’s base rate of pay. This does not include:

  • Incentive-based payments and bonuses;
  • Loadings;
  • Other monetary allowances;
  • Overtime or penalty rates; and
  • Any other separately identifiable amount.

The table below provides a guideline in regards to the redundancy pay entitlements of an employee, based on the number of years of continuous service with the employer upon termination.

The Australian redundancy pay table

For additional information or employment legal advice, please contact our team of experts at Owen Hodge Lawyers. We can assist you with any questions you may have about employment law, redundancy NSW, how your unused annual leave affects your termination pay and more.

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