Who doesn't get redundancy pay

Some employees don’t get redundancy pay when their job is made redundant.

Learn about who isn’t entitled to redundancy pay.

On this page:

Employees who don't get redundancy pay

Most employees get their redundancy pay entitlements from the National Employment Standards (NES).

Employees don’t get redundancy pay if they:

  • have less than 12 months of continuous service with their employer
  • have been employed for a specific period of time, project, or season
  • have been terminated for serious misconduct
  • are a casual employee
  • are a trainee employed only for the length of the training arrangement
  • are an apprentice.

There are special arrangements for employees whose employment transfers when the business they work for is sold. Find out more at When businesses change owners.

For more information about redundancy under the NES, go to Redundancy pay.

Example: Employee who doesn’t get redundancy pay – length of service

Fred works part-time for a large tiling wholesaler. He is covered by the Storage and Wholesale Award.

Fred has worked at the company for 7 months. During a company restructure, he is told his role is being made redundant.

The Storage and Wholesale Award refers to the National Employment Standards for redundancy entitlements. Because Fred has worked for the company for less than one year, he won’t receive redundancy pay.

Small business employers

Most small businesses don’t have to pay their employees redundancy pay under the NES.

There are exceptions for:

Small businesses are businesses that have fewer than 15 employees. To work out if an employer is a small business for redundancy purposes, count all employees employed at the time of the redundancy, including:

  • the employee or employees being made redundant
  • any other full or part-time employees
  • casual employees that are employed on a regular and systematic basis
  • all employees of associated entities, including those based overseas.

Downsizing

Employers that become a small business as part of the process of downsizing their workforce may be required to pay their employees redundancy pay under the NES.

This applies in some circumstances where the employer is bankrupt or goes into liquidation.

This means that employees who are made redundant after their employer becomes a small business may be entitled to redundancy pay under the NES.

This only applies if:

  • the employer is bankrupt or in liquidation
  • the employee isn’t covered by an award or agreement that contains an industry-specific redundancy scheme
  • the redundancies that led to the employer becoming a small business happened on or after 15 December 2023.

Other rules also apply, including about when and how those terminations took place.

Example: Employer still required to make redundancy payments

A medium-sized electronics retailer employs 45 staff. Due to market factors, the business becomes insolvent and goes into liquidation.

An insolvency practitioner is appointed and makes 40 employees in the repair, sales and customer service part of the business redundant.

Five payroll employees remain employed to help with winding up the business.

Three months after the 40 employees were made redundant, the business permanently closes and the remaining 5 employees are made redundant.

Even though the business is classified as a small business now as it employs fewer than 15 people, the employees will still be entitled to redundancy pay.

The remaining employees get redundancy pay because the business:

  • is in liquidation
  • became a small business because it terminated the 40 employees due to the insolvency of the employer
  • isn't covered by an industry-specific redundancy scheme.

Industry-specific redundancy schemes

An award or agreement can contain industry specific terms that cover small businesses. A small business in that industry may need to pay their employees redundancy pay.

Check the award or agreement for rules on redundancy.

Find a list of awards with industry-specific redundancy schemes at Redundancy under awards and agreements.

Source reference for page: Fair Work Act 2009 sections 23, 121–123, 141

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