Redundancy pay

An employee's position is made redundant when their employer no longer needs a role to be performed, or no longer needs the same number of employees to perform certain tasks. If you are made redundant, you may be entitled to redundancy pay.

Redundancy pay is a payment offered to an employee because their employer no longer needs anyone to do their job. An employee may be made redundant because:

• the job they have been doing is replaced because their employer introduced new technology (that is, it can be done by a machine)
• business slows down
• the business moves
• a merger or takeover happens
• the business restructures or reorganises
• the employer stops trading because they became bankrupt or went into liquidation.

Whether you are entitled to redundancy pay, and how much you should be paid, will depend on:

• how long you have been employed
• the size of the employer's business
• whether the employer has offered you a different job
• the ability of the employer to pay the amount owed
• what it says in any award, enterprise agreement or contract of employment that covers you.

If you are entitled to redundancy pay, you will be paid your ordinary rate of pay. This does not include any overtime, allowances, commissions or bonuses. You should generally be paid when you finish work or on the next regular payday.

If you are made redundant you may also be entitled to notice or payment in lieu of notice.

Not all redundancies are genuine. If you have been made redundant and you don't believe it is genuine, you may have a claim for unfair dismissal. You should get legal advice as there are strict time limits for making unfair dismissal claims.

For more information, see Unfair dismissal.

The amount of redundancy pay your employer has to pay you will depend on your length of service. The following table shows redundancy payments for particular periods:

If you have been employed for 12 months or less your employer does not have to pay you redundancy pay.

If your employer employs less than 15 people at the time of your dismissal, then you are not entitled to redundancy pay, unless your award or enterprise agreement says otherwise.  You are included in this number as well.

The number of employees includes the person being made redundant, but usually not casual employees, unless they work on a regular and systematic basis. The number of employees can also include employees of associated companies or businesses.  

The amount of redundancy pay owing may be reduced (in some cases to zero) if your employer offers you another job and you don't accept it. In some cases your employer will need to apply to the Fair Work Commission for an order that they pay a reduced amount of, or zero, redundancy pay.

If your position has been made redundant and your employer has offered you another position, you should get legal advice before accepting or rejecting it.

If your employer can't afford to pay redundancy, they can apply to the Fair Work Commission for an order that they don't have to pay, or that the amount they have to pay should be reduced.

If your employer can't pay because they have gone into liquidation or become bankrupt, you may be entitled to recover unpaid entitlements, including redundancy, under a government scheme guaranteeing some entitlements. For more information, see What if my entitlements are not paid.

If your job becomes redundant because the business you work for has changed ownership and you get a job with the new employer, you generally won't be entitled to redundancy pay. This is because the new employer will recognise your previous employment and your service will be continuous. 

However, in some cases, your new employer can choose not to recognise your previous service. If this happens, your old employer may have to give you redundancy pay.

If you aren't sure whether you are entitled to redundancy pay or how much you should be paid, you should get legal advice.

If you are entitled to redundancy pay but your employer won't pay you or hasn't paid you the right amount, there are steps you can take to try and recover the money that you are entitled to. For more information, see What if my entitlements are not paid?