Redundancy in Australia: Your Rights and Entitlements
Redundancy occurs when your employer no longer needs your job to be performed by anyone. It is distinct from dismissal for misconduct or poor performance — redundancy is about the role, not the person. Australian law provides important protections for employees who are made redundant, including minimum notice periods and redundancy pay.
What Is a Genuine Redundancy?
For a redundancy to be considered genuine under the Fair Work Act 2009, three conditions must all be met:
- The job is no longer required — your employer no longer needs the work you were doing to be done by anyone (not just you)
- Consultation occurred — the employer consulted with you as required by the applicable Modern Award or Enterprise Agreement before making the decision
- Redeployment was not possible — there was no reasonable opportunity to redeploy you into another suitable role within the business or associated entities
If any of these conditions are not met, the dismissal may not be a genuine redundancy — in which case it could be treated as unfair dismissal, and you may have grounds to lodge a claim with the Fair Work Commission.
Notice Period
Before your employment ends, your employer must give you written notice. The minimum notice period under the NES depends on your continuous service:
| Length of continuous service | Minimum notice |
|---|---|
| Less than 1 year | 1 week |
| 1 year to 3 years | 2 weeks |
| 3 years to 5 years | 3 weeks |
| More than 5 years | 4 weeks |
If you are over 45 years of age and have completed at least 2 years of continuous service, add 1 extra week to the above amounts.
Your employer may pay you in lieu of notice instead of requiring you to work out the notice period. Your Modern Award or Enterprise Agreement may also set longer notice periods than the NES minimum.
Redundancy Pay
In addition to notice, employees are entitled to redundancy pay based on their years of continuous service:
| Years of continuous service | Redundancy pay |
|---|---|
| 1–2 years | 4 weeks |
| 2–3 years | 6 weeks |
| 3–4 years | 7 weeks |
| 4–5 years | 8 weeks |
| 5–6 years | 10 weeks |
| 6–7 years | 11 weeks |
| 7–8 years | 13 weeks |
| 8–9 years | 14 weeks |
| 9–10 years | 16 weeks |
| 10 years or more | 12 weeks |
Note that the entitlement decreases slightly at 10+ years. This is because employees with very long service are typically entitled to a more generous long service leave payout, which partially offsets the reduction.
Small Business Exemption
Businesses with fewer than 15 employees are exempt from paying redundancy pay under the NES. However, they must still provide the minimum notice periods set out above.
If you work for a small business and are made redundant, you will not receive redundancy pay from your employer, but you will still receive all accrued annual leave and any other entitlements.
Redeployment Obligation
Before making you redundant, your employer must genuinely consider whether they can redeploy you into another suitable position within the business — or within an associated entity. The redeployment must be reasonable, having regard to your skills, experience, and the nature of the role.
If a suitable role was available and your employer failed to offer it to you, the dismissal may not be a genuine redundancy. You should seek advice promptly if you believe this applies to your situation.
Tax Treatment of Redundancy Pay
Genuine redundancy payments receive concessional tax treatment under Australian law:
- A tax-free component exists, calculated as: $12,524 + ($6,264 × years of service) (2024–25 figures; indexed annually). The tax-free amount is not subject to income tax.
- The excess above the tax-free threshold is taxed at a maximum rate of 32%, rather than your marginal rate.
- Notice pay and annual leave payouts are taxed as ordinary income.
This concession can result in significant tax savings, especially for long-serving employees. Speak to an accountant or tax adviser to understand the full picture.
If you have been made redundant, ensure you receive your full entitlements — notice, redundancy pay, all accrued leave, and superannuation. If anything is missing, the Fair Work Ombudsman (fairwork.gov.au) can assist.