Redundancy pay

About redundancy

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. 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.

If you are made redundant, you may be entitled to redundancy pay.

If you are made redundant, you can’t make an unfair dismissal claim. However, not all redundancies are genuine. If your redundancy is not 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.

Redundancy pay

Redundancy pay is a payment offered to an employee because their employer no longer needs anyone to do their job.

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 (unless the employer downsizes due to bankruptcy or liquidation after 15 December 2023)
• 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.

The amount of redundancy pay your employer has to pay you will depend on your continuous length of service. This is the length of time you are employed, and doesn’t include periods of unpaid leave. The following table shows redundancy payments for particular periods:

You are not entitled to redundancy pay under the National Employment Standards if you:

• have been employed for 12 months or less
• are dismissed for serious misconduct
• are only employed for a specific period of time, task, project, or season
• are a casual employee
• are an apprentice
• are a trainee employed only for the length of your training agreement.

However, you may still be entitled to redundancy pay under your award or agreement.  

To check what redundancy pay you may be entitled to under an award, see Redundancy pay and entitlements on the Fair Work Ombudsman website.

To check the rules for redundancy under your agreement, search for your agreement on the Find an enterprise agreement page on the Fair Work Commission website.

Small businesses

A small business employs less than 15 people at a particular time. This includes a person being made redundant, but usually not casual employees, unless they work on a regular and systematic basis. It can also include employees of associated companies or businesses. 

If you are employed by a small business, you are not entitled to redundancy pay, unless your award or enterprise agreement says otherwise.

If your employer downsizes due to bankruptcy of liquidation, your employer may still be required to pay redundancy entitlements.

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

Offered a different job

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.

Employer can’t afford redundancy pay

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.

For more information, see What if my entitlements are not paid?

New business owner

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?