Redundancy pay is severance compensation for employees terminated due to genuine redundancy, based on length of service.
Legislation: Fair Work Act 2009 s119 | Category: Termination
What is Redundancy Pay?
Redundancy pay is severance compensation payable to employees whose employment is terminated due to genuine redundancy. Under the NES, employees with at least 12 months’ continuous service are entitled to redundancy pay based on their length of service, ranging from 4 weeks’ pay for 1-2 years of service up to 16 weeks’ pay for 9-10 years.
Small business employers (fewer than 15 employees) are exempt from the NES redundancy pay obligation. However, redundancy pay may still be required under awards, enterprise agreements, or contracts regardless of employer size.
Key Compliance Points for Employers
- Redundancy pay is in addition to notice of termination entitlements
- The scale reduces after 10 years of service (16 weeks for 9-10 years, 12 weeks for 10+ years)
- The FWC can reduce redundancy pay if the employer finds acceptable alternative employment or cannot afford the full amount
- Check awards and agreements for enhanced redundancy provisions
- Redundancy pay is calculated on the employee’s base rate of pay for ordinary hours
Frequently Asked Questions
What is Redundancy Pay?
Redundancy pay is severance compensation for employees terminated due to genuine redundancy, based on length of service.
Why is Redundancy Pay important for employers?
Understanding redundancy pay helps employers comply with Australian employment law, avoid penalties, and maintain fair workplace practices.
