Redundancy pay

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.