Redundancy

What is re​dundancy?

A position is made redundant when an employer no longer needs a role to be performed, or no longer needs the same number of employees to perform certain tasks. Redundancy can also happen when an employer becomes insolvent or bankrupt.

For more information, see Redundancy on the Fair Work Ombudsman website.

​Am I entitled to a redund​ancy payout?

If your job is made redundant or your employer becomes insolvent or bankrupt, you are entitled to a redundancy payment under the National Employment Standards (NES) unless you:

• worked for your employer for less than 12 months
• worked for a small business (unless the employer downsizes due to bankruptcy or liquidation after 15 December 2023)
• were employed on a fixed term or seasonal basis
• were dismissed for serious misconduct, or
• were a casual employee, an apprentice or a trainee for a specified period
• were terminated because of the ordinary and customary turnover of labor – this is a complex issue and you should get advice if you are in this situation.​

If you fit into one of those categories of workers you may still be entitled to a redundancy payment if it says so in your award, industrial instrument or employment contract.

For more information, see:

• Redundancy pay in the My problem is about section of our website.
  
• National Employment Standards and Who doesn't get redundancy pay? on the Fair Work Ombudsman website.

​​What amount of redundancy pay am I entitled to?

The amount of redundancy pay you are entitled to will normally be found in your​​ employment contract, your award or industrial agreemen​t.

If there is nothing in your contract, award or enterprise agreement, or if your employer has no internal written policies relating to​​ the payment of redundancies, you are entitled to a redundancy payment under the National Employment Standards (NES):

This scale does not apply if you have worked:

• as a casual
• for less than one year or 
• with an employer who operates a small business (unless the employer downsizes due to bankruptcy or liquidation after 15 December 2023).

If your contract, award or agreement entitles you to an amount of redundancy greater than that in the NES scale, then your employer must pay you the amount in your contract, award or agreement.

For more information, see Redundancy pay & entitlements on the Fair Work Ombudsman website.

Does redundancy pay include superannuation?

No. However, superannuation is payable on any payment in lieu of notice.

Is tax deducted from a redundancy payout?

Redundancy payments are tax free up to a limit based on your years of service.

You should get information from the Australian Taxation Office or an Accountant about any tax payable on a redundancy payout.

Will I get a payout if I ​w​​ork for a small business?

You may be entitled to redundancy pay if your award, industrial agreement or contract of employment say so.​​​

If there is nothing in your contract, award or agreement, you are not entitled to a redundancy payout under the National Employment​​ Standards (NES) if your employer is a small business, that is a business with less than 15 employees in total.

From 15 December 2023, if your employer downsizes due to bankruptcy or liquidation, your employer may still be required to pay redundancy entitlements.

For more information, see Redundancy pay in the My problem is about section of our website.

What if I was mad​​e redu​ndant just so my employer could get rid of me?

If you believe your redundancy was not genuine, for example, someone else was later employed to do your job or you were not sufficiently consulted about a workplace restructure, you may have grounds to​ apply for unfair dismissal or general protections dismissal.

You only have 21 days from the date of termination to make an application for unfair dismissal or a general protections dismissal application.

If you believe your redundancy was not genuine, you should get legal advice. ​

Can my employer reduce the amount of redundancy pay I am entitled to?

Your employer can apply to the Fair Work Commission for an order reducing the amount of redundancy pay you are entitled to if they:

• are able to offer you another acceptable job, or
• can't afford to pay the amount of redundancy pay owing to you.

If your employer wants to reduce your redundancy amount, you should get legal advice.

What if my employer refuses to pay me a redundancy or pays me less than what I am entitled to?

If you are entitled to a redundancy payout and your employer has not paid it, you should contact the Fair Work Ombudsman. They can investigate breaches of the Fair Work Act 2009 (Cth), which includes not paying a redundancy. If the Fair Work Ombudsman is unable to assist, you may be able to make a claim to the relevant court for your unpaid redundancy. This is similar to claiming a debt. You have six years from when the debt became owed to you to make this type of claim.

For more information, see:

• Recovering unpaid wages and entitlements - Frequently Asked Questions​
• Redundancy pay in the My problem is about section of our website.
  

Am I entitled to redundancy pay if I am offered another position or location?

If your employer offers you an acceptable alternate position within their organisation they can apply to the Fair Work Commission (the Commission) for an order that they do not​ have to pay you the usual amount of redundancy pay. 

There are a number of factors that the Commission​ would consider when deciding whether the amount of redundancy should be reduced, including:

• the extra distance needed to travel to the new location
  
• the personal difficulties caused, for example, caring for family
  
• whether your duties would be changed, and
  
• other factors.
  

If you are in this situation, ​you should get legal advice.

Can I be paid redundancy if I work in the same position on reduced hours?

You can agree with your employer to work a position on reduced hours and be paid a partial redundancy for the lost hours.

Do I keep my redundancy entitlements if my job is transferred from one business to another?

If your job is transferred to an associated entity, your redundancy entitlement is automatically transferred to the new business. An associated entity is a business that is connected to your first employer in some way, for example, where one of the businesses owns or controls the other business.

If the businesses are not associated entities, the new employer can choose not to recognise your service with the old employer for redundancy entitlements. If the new employer does not recognise your service, usually the old business must pay you your redundancy entitlement. This is a complex area of law and you should get legal advice.

My employer is being taken over by a new business and I have been offered a job in the new company. If I refuse that offer, does my existing employer have to pay my redundancy entitlements?

If the new position offered is similar in terms and conditions with your existing position, and you refuse it, your existing employer does not usually have to pay you your redundancy entitlement. 

If you are in this situation, you should get legal advice.