Being told your role is redundant can feel identical to being fired, but the two are treated very differently under Australian law — and that difference decides what you're owed. Here's what a genuine redundancy actually requires, how severance pay is calculated, and what to do if something about it doesn't add up.
- A redundancy is only "genuine" if your job itself is no longer needed by anyone, your employer met any consultation obligations, and redeploying you elsewhere in the business wasn't reasonable.
- If any of those three things aren't true, it may not be a genuine redundancy — and you could have grounds for an unfair dismissal claim instead.
- Redundancy pay is set by law based on your length of continuous service, from 4 weeks up to a maximum of 16 weeks.
- Small businesses with fewer than 15 employees are generally exempt from paying redundancy pay — but still have to give proper notice.
- Casual employees and anyone with under 12 months' service generally aren't entitled to redundancy pay under the National Employment Standards.
- Your accrued annual leave is always paid out in full — but unused sick leave generally isn't, and long service leave depends on your state.
Know exactly what you're owed before you sign anything.
LucidLaw is building a way to get matched with an Australian employment lawyer who can check your redundancy is genuine and your payout is correct.
Join the waitlist →Free. No spam. Early access when we launch.
What makes a redundancy "genuine"?
Under the Fair Work Act, a redundancy has to meet three conditions to be genuine. All three — not just one.
Your job is no longer required by anyone
The role itself has to disappear because of changes to how the business operates — restructuring, automation, downsizing, a location closing. If someone else is doing your job under a different title a month later, that's a red flag.
Your employer followed any consultation obligations
Most modern awards and enterprise agreements require employers to notify affected employees, discuss the change, and genuinely consider their input before the decision is locked in — not just announce it after the fact.
Redeployment wasn't reasonable
If a suitable alternative role existed elsewhere in the business (or a related entity) and your employer didn't offer it to you, the redundancy may not be genuine.
If your redundancy isn't genuine, it doesn't automatically mean you were treated unlawfully — but it does open the door to an unfair dismissal claim through the Fair Work Commission, which has a strict 21-day deadline from your dismissal date. Use the deadline calculator →
Employment tenure — what actually counts
"Length of service" isn't just a nice-to-know detail — it directly drives two separate entitlements that run on different scales: your notice period and your redundancy pay. Both are based on continuous service, meaning unbroken employment with the same employer (authorised leave like annual or parental leave still counts; most unpaid leave doesn't break it, but check the specifics if you've had a gap).
Minimum notice period (or payment in lieu):
| Continuous service | Minimum notice period |
|---|---|
| Up to 1 year | 1 week |
| 1 to 3 years | 2 weeks |
| 3 to 5 years | 3 weeks |
| More than 5 years | 4 weeks |
Add 1 extra week to the table above if you're 45 or older and have completed at least 2 years of continuous service.
This notice period applies regardless of the size of the business — it's separate from redundancy pay, and it's not something a small business can skip.
Severance — are you eligible, and how much?
This is the part everyone actually wants to know. Redundancy pay is set out in the National Employment Standards and scales with your length of service:
| Continuous service | Redundancy pay |
|---|---|
| 1–2 years | 4 weeks' pay |
| 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 | 12 weeks |
This is calculated on your base rate of pay for ordinary hours — it excludes overtime, bonuses, loadings, allowances, and penalty rates, so it's not the same figure as your average take-home pay.
That last line of the table isn't a typo. Redundancy pay peaks at 16 weeks for employees with 9–10 years of service, then actually drops to 12 weeks for anyone past the 10-year mark. It's a genuine, well-documented feature of the NES scale — and one most employees (and plenty of employers) don't expect.
Who isn't covered by this scale:
- Casual employees — no firm advance commitment to ongoing work means no NES redundancy pay.
- Under 12 months' service — the NES entitlement only starts after a full year.
- Small business employees — a small business employer is one with fewer than 15 employees at the time your employment ends, counting regular casuals and a working owner. Small business employers are generally exempt from paying redundancy pay under the NES (though some awards or contracts may still provide for it — worth checking). One exception: since December 2023, this exemption doesn't apply if the business only dropped below 15 staff because of redundancies made in the 6 months before it went into bankruptcy or liquidation.
Being exempt from redundancy pay does not exempt an employer from proper notice, or from paying out your other final entitlements — covered next.
What happens to your leave?
Redundancy pay is only one part of your final payout. Leave is a separate entitlement, and it's treated differently depending on what kind of leave it is — this is where a lot of people get caught out expecting money that isn't actually owed.
- Annual leave — always paid out in full. Whatever annual leave you've accrued and not taken gets paid out as part of your final pay, no matter why your employment ended. This applies to every employee, in every state.
- Personal/carer's (sick) leave — not paid out. This is the one that surprises people. Under the National Employment Standards, unused sick leave is forfeited when your employment ends — it doesn't convert to cash. The only exception is if your award, enterprise agreement, or employment contract specifically promises otherwise.
- Long service leave — depends on your state. Unlike annual leave, long service leave isn't set by the Fair Work Act — each state and territory has its own legislation, with different service thresholds for a redundancy payout (for example, New South Wales allows a pro-rata payout after 5 years' service; Queensland requires 7). Check your state or territory's long service leave scheme, since the rules genuinely differ.
Can you be made redundant while on leave — or right before it?
There's no blanket rule that says you can't be made redundant while on leave, or in the lead-up to it. But two separate protections kick in depending on your situation, and they change who has to prove what.
If you're already on parental leave, you have a statutory "return to work guarantee" — the right to go back to your old role, or if it's genuinely gone, to the nearest available equivalent role in status and pay. A redundancy during parental leave is legally possible, but only if it meets the full genuine redundancy test, and in practice these get heavily scrutinised.
Either way — during leave or in the lead-up to it — it's unlawful for a redundancy to happen because you took, requested, or gave notice that you intended to take parental leave (or because you're pregnant). This protection attaches from the moment you request or notify the leave, not just once it starts — so timing a redundancy for just before someone's leave begins gets exactly the same scrutiny as timing it during the leave itself.
Here's the detail that actually matters if this happens to you: these claims work differently to an unfair dismissal claim. Once you show you were made redundant around the time you exercised that right, the onus flips — it's your employer who then has to prove the redundancy genuinely had nothing to do with it, not you who has to prove that it did. It's still worth acting quickly: the same 21-day deadline applies.
Parameters — what if something doesn't add up?
A few situations worth knowing about:
- Your award or enterprise agreement may offer more than the NES minimum — always check what applies to you specifically, since the NES is a floor, not a ceiling.
- A genuine redundancy can still be challenged on the payout amount — if you think your employer miscalculated your service or wrongly applied the small business exemption, you can raise this with the Fair Work Ombudsman or seek advice.
- If the redundancy isn't genuine, your avenue isn't a redundancy pay dispute — it's an unfair dismissal claim, and the clock is running from the day you were dismissed, not from when you realised something was off.
Not always, especially for a straightforward payout calculation. But if your role was refilled shortly after, you weren't consulted, or a reasonable alternative position existed and wasn't offered, it's worth getting advice before you sign a deed of release — because signing one typically ends your ability to make a claim later.
Frequently asked questions
No. Redundancy pay only applies when your employer ends your employment because your role no longer exists. If you resign — even because you suspect a redundancy is coming — you generally forfeit the entitlement. If you believe you were pressured into resigning, that may be constructive dismissal instead, which is a different claim.
Genuine redundancy payments get concessional tax treatment up to a tax-free limit that's indexed and changes each financial year, with anything above that taxed as an employment termination payment. The exact thresholds move annually, so check the current figures on the ATO website rather than relying on a number that may already be out of date.
Yes, and this catches a lot of people out. Centrelink applies an "income maintenance period" to redundancy pay and leave payouts — broadly, your payout is divided by your ordinary fortnightly pay to work out how many weeks you're expected to live on it before JobSeeker or similar payments start. This is separate from, and on top of, the standard one-week waiting period. It's worth factoring in before you assume support payments will begin immediately.
Not lawfully. This goes directly against the first part of the genuine redundancy test — that your job itself is no longer required by anyone. If the same role reappears under a different title, or someone else is doing your work shortly after you're gone, that's a strong sign the redundancy wasn't genuine, and you may have grounds for an unfair dismissal claim.
The same weeks-of-service scale applies — the difference is in the dollar figure, since it's based on your base rate of pay for your ordinary hours. A part-time employee with the same length of service as a full-time employee gets the same number of weeks, just calculated against part-time hours.
Being on leave, or about to go on it, doesn't make you immune from a genuine redundancy. But it can't lawfully happen because of the leave, and that protection applies from the moment you request or give notice of the leave — not just once it's started. If it happens around that time, your employer carries the burden of proving it genuinely wasn't related, not the other way around — see "Can you be made redundant while on leave" above for the full explanation.
The bottom line: A redundancy has to be genuine to be lawful, and genuine means the job disappears, you were consulted, and redeployment wasn't reasonable — not just that your employer decided to let you go. If it stacks up, your severance is set by a clear formula based on your years of service. If it doesn't stack up, this may not be a redundancy at all, and the unfair dismissal clock is already running.
LucidLaw is building the platform for exactly this.
Plain-language guidance on your employment, tenancy, consumer, and family law rights — with warm referral to a verified lawyer when you need one. Launching in Australia in 2026.
Join the waitlist →No spam. No legal advice. Just early access when we launch.