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HR Glossary

Redundancy pay

Australia · Fair Work and entitlements
What is redundancy pay?

Redundancy pay is the severance payment Australia's National Employment Standards require when an employee's job is made genuinely redundant, scaled from 4 up to 16 weeks' base pay by years of continuous service. Small businesses with fewer than 15 employees are generally exempt.

NES redundancy pay scale (completed years of service)

1 to 2 years4 weeks' pay
2 to 3 years6 weeks
3 to 4 years7 weeks
4 to 5 years8 weeks
5 to 6 years10 weeks
6 to 7 years11 weeks
7 to 8 years13 weeks
8 to 9 years14 weeks
9 to 10 years16 weeks
10+ years12 weeks

When is redundancy pay owed?

When the employer no longer requires the job to be done by anyone, or becomes insolvent. It is the role that must disappear, not the person: if the position is refilled shortly afterwards, the redundancy was not genuine, and the dismissal is exposed to an unfair dismissal claim. Redundancy pay sits on top of notice of termination and the payout of accrued leave; the three are separate obligations.

How much is payable?

The NES scale runs on completed years of continuous service, from 4 weeks' pay after one year to a peak of 16 weeks at nine years, stepping back to 12 weeks at ten years or more (the step-down reflects long service leave becoming available). Pay means base rate for ordinary hours, excluding loadings, overtime and bonuses. Awards and agreements can provide more generous schemes, and some industries do.

What are the exemptions?

Small business employers (fewer than 15 employees by headcount) are generally exempt from NES redundancy pay, as are employees with less than 12 months' service, casuals and most fixed-term completions. An employer that finds the employee acceptable alternative employment can also apply to the Fair Work Commission to reduce the amount payable.

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Notice period

A notice period is the time between telling an employee (or employer) that employment will end and the final day of work.

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Employment termination payment (ETP)

An employment termination payment (ETP) is a lump sum paid in consequence of the termination of employment in Australia, such as severance beyond the tax-free redundancy amount, payment in lieu of notice or an ex gratia amount.

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Stand down

A stand down is when an employer directs employees not to work, without pay, because they cannot be usefully employed for reasons outside the employer's control, such as an equipment breakdown, industrial action or a stoppage of work.

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Unfair dismissal

Unfair dismissal is a dismissal that Australia's Fair Work Commission finds harsh, unjust or unreasonable, where the employee was eligible to claim and the dismissal was not a genuine redundancy.

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Common questions

Is redundancy pay taxed?

A genuine redundancy payment has a tax-free component based on service, with amounts above it treated as an employment termination payment. The thresholds are indexed each year, so check the current ATO figures.

Do casuals get redundancy pay?

No. Casual employees are excluded from NES redundancy pay; the casual loading is part of the trade-off.

This page is general information, not legal advice. We check figures annually and update them on a best-efforts basis, but employment rules change and we cannot promise everything here is current or complete. Before you act on it, confirm the detail with the Fair Work Ombudsman (fairwork.gov.au) or your own adviser. Last reviewed July 2026.