You may be entitled to a redundancy payout if your employer has terminated your employment because they no longer require anyone to work in your position. This is often due to the financial difficulties of an employer or due to a company restructure. Your employer can also make you redundant if the business becomes bankrupt or insolvent. This article will provide you with an overview of when you will be entitled to a payout if you ever face this situation.

Does it Apply to Me?

Depending on the type of business you work for, you may or may not be entitled to a redundancy payout. Some small business employers are not required to pay redundancy if they employ fewer than 15 people. You will need to work out the following:

  • How many people your employer employed at the time they made you redundant;
  • Whether or not they are casual employees employed regularly or sporadically; and
  • If there are any associated entities.

Once you know if your employer fits within the redundancy pay category you need to work out if you do as an employee. Consider the following factors:

  • Have you been employed for less than 12 months?
  • Have you been employed for a specific period, a specific task or season?
  • Has your employment been terminated for serious misconduct?
  • Are you a casual employee?
  • Are you an apprentice?
  • Are you employed under a training arrangement (other than an apprentice)?
  • Does a redundancy scheme cover you in a redundancy agreement?

If you answer yes to any of the above questions, then you will not be eligible for a redundancy payout under the Fair Work Act 2009.

What do I Receive?

If you have worked out that redundancy pay should apply to you, then the payment you receive will depend on a few different factors. Your payout will be calculated on your base rate of pay. This does not include any extra payments you may receive as part of your position such as leave loadings, overtime or penalty rates.

The following table sets out the period of payment you will receive depending on your level of service to your employer:

Period of Service Pay equivalent to:
Between 1 and 2 years 4 weeks
Between 2 and 3 years 6 weeks
Between 3 and 4 years 7 weeks
Between 4 and 5 years 8 weeks
Between 5 and 6 years 10 weeks
Between 6 and 7 years 11 weeks
Between 7 and 8 years 13 weeks
Between 8 and 9 years 14 weeks
Between 9 and 10 years 16 weeks
Over 10 years 12 weeks

The reason that the redundancy pay is reduced once you work for an employer for ten years is that you also have the right to be paid pro-rata for long service leave. The table above is the national minimum that applies to all employees who are covered by Federal awards.

Key Takeaways

We recommend that you seek legal advice as to what you are entitled to if your employer has made you redundant. Your redundancy must be considered a genuine redundancy – that is, it must be because your role is no longer needed and has been abolished. If this is not the case, then you may have the ability to apply to the Fair Work Commission for unfair dismissal. Your employer may have also made your position redundant if your employer substantially changes your role to something else and you are effectively employed in a new position.

To know your rights and entitlements for your individual situation, get in touch with our employment lawyers on 1300 544 755.

Bianca Reynolds
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