Redundancy Payment

Redundancy Payment – How Much Will You Get?

If you’re made redundant, under employment law you may be entitled to receive a redundancy payment comprising of any outstanding wages, unused annual and long service leave plus severance pay.

Some employees aren’t entitled to a redundancy payment. This includes:

  • Casual employees and apprentices.
  • People who have been employed for less than 12 months, for a stated period of time or for an identified task or project.
  • Employees who have lost their job due to serious misconduct.

The National Employment Standard sets out the amount of severance pay you should receive. This amount is based on your continuous years of service and your base rate of pay.

The base pay rate is the amount of pay you receive for your ordinary hours of work. It doesn’t include any additional amounts you may receive from your employer, such as bonuses, overtime, loadings and allowances.

Working out your redundancy payment

  • 1 year of continuous service = 4 weeks severance pay.
  • 2 years of continuous service = 6 weeks severance pay.
  • 3 years of continuous service = 7 weeks severance pay.
  • 4 years of continuous service = 8 weeks severance pay.
  • 5 years of continuous service = 10 weeks severance pay.
  • 6 years of continuous service = 11 weeks severance pay.
  • 7 years of continuous service = 13 weeks severance pay.
  • 8 years of continuous service = 14 weeks severance pay.
  • 9 years of continuous service = 16 weeks severance pay.
  • 10 years or more of continuous service = 12 weeks severance pay.

If you have 10 or more years of continuous service, your severance pay is reduced because of the long service leave you are entitled to.

What if your employer can’t afford your redundancy payment?

If your employer can’t afford to pay your full employee entitlements when you’re made redundant because they are bankrupt or have gone into liquidation, they can apply to the Fair Work Commission to reduce how much they need to pay.

If this happens, you may be able to receive financial assistance from the government’s Fair Entitlements Guarantee. Under this safety net scheme, you may be paid for annual leave, unpaid wages, payment in lieu of notice, long service leave and severance pay.

You must lodge your claim within 12 months of losing your job or your employer becoming bankrupt or going into liquidation.

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