Redundancy pay in WA: what you are actually entitled to
Direct answer: Redundancy pay under the National Employment Standards runs from four weeks at one year of continuous service to sixteen weeks at nine to ten years, then drops to twelve weeks at ten years and over. Employees with less than twelve months of continuous service have no NES entitlement, and small business employers are generally not required to pay it. An award, enterprise agreement or contract can provide more, and notice, accrued annual leave and long service leave are separate entitlements on top.
The NES redundancy pay scale
The scale is based on the employee's period of continuous service with the employer at the time of termination, and the weeks are weeks of the employee's ordinary base rate of pay for their ordinary hours of work.
| Continuous service | Redundancy pay |
|---|---|
| Less than 1 year | Nil |
| At least 1 year but less than 2 | 4 weeks |
| At least 2 years but less than 3 | 6 weeks |
| At least 3 years but less than 4 | 7 weeks |
| At least 4 years but less than 5 | 8 weeks |
| At least 5 years but less than 6 | 10 weeks |
| At least 6 years but less than 7 | 11 weeks |
| At least 7 years but less than 8 | 13 weeks |
| At least 8 years but less than 9 | 14 weeks |
| At least 9 years but less than 10 | 16 weeks |
| 10 years and over | 12 weeks |
The drop at ten years is not a drafting error. It reflects the long service leave entitlement that arises around that point, which is dealt with by separate legislation. It does mean that an employee approaching ten years should understand both entitlements together rather than one at a time.
When the NES scale does not apply
- Small business employers. An employer with fewer than fifteen employees, counted across associated entities and including regular and systematic casuals, is generally not required to pay NES redundancy pay. An award, enterprise agreement or contract may still require it.
- Less than twelve months of service. No NES entitlement arises, whatever the reason for the redundancy.
- Casual employees and employees engaged for a specified period, task or season are generally excluded, as are employees dismissed for serious misconduct.
- Industry schemes. Some awards and enterprise agreements operate their own redundancy arrangements that replace the NES scale entirely, and some require contributions to an industry fund instead.
- Reduction by the Commission. Where the employer obtains other acceptable employment for the employee, or cannot pay the amount, the Fair Work Commission can reduce what is payable on application.
Because the exceptions run in both directions, the applicable award or agreement should be read rather than the minimum assumed. Employees frequently receive less than they are owed because a more generous instrument was never checked, and employers occasionally pay amounts they never owed for the same reason.
Notice of termination is separate
Notice under the NES is also based on continuous service, and is payable in addition to redundancy pay. It can be worked out or paid in lieu.
| Continuous service | Minimum notice |
|---|---|
| 1 year or less | 1 week |
| More than 1 year, up to 3 years | 2 weeks |
| More than 3 years, up to 5 years | 3 weeks |
| More than 5 years | 4 weeks |
An additional week applies where the employee is over 45 and has completed at least two years of continuous service. A contract or award can require longer notice, and where it does, the longer period applies.
What else is payable on a redundancy
- Accrued annual leave, paid out on termination, with any award or agreement leave loading if it applies.
- Long service leave. In Western Australia this is dealt with by state legislation rather than the Fair Work Act. A full entitlement arises after ten years of continuous employment, and a pro rata entitlement can arise after a shorter qualifying period when employment ends. The current qualifying periods should be checked against the Act as it stands.
- Any accrued but untaken entitlement under the contract, award or agreement - time in lieu, rostered days off, and similar.
- Outstanding wages, allowances and superannuation to the date of termination.
Personal or carer's leave is not paid out on termination unless an award, agreement or contract says otherwise, which is a common misunderstanding.
Tax is a separate test
A payment that is a redundancy for employment law purposes is not automatically a genuine redundancy payment for tax purposes. The tax concession applies up to an annually indexed limit made up of a base amount plus an amount for each completed year of service, and it is generally unavailable where the employee has reached age-pension age. Different components of a final payment are also taxed differently - redundancy pay, payment in lieu of notice, accrued annual leave and long service leave do not all attract the same treatment. This should be put to an accountant before the payment is processed rather than after, because correcting it afterwards is harder than getting it right.
Checking your own figure
- Find your start date and calculate continuous service to the termination date.
- Identify the award or enterprise agreement that covers your role, and read its redundancy and notice clauses.
- Compare that instrument against the NES scale and take the more generous.
- Add notice, including the extra week if you are over 45 with at least two years of service.
- Add accrued annual leave and any long service leave entitlement.
- Compare the total to what the employer has offered, and ask for the calculation in writing if it is not itemised.
If the figures do not reconcile, that is worth raising before signing anything. A deed of release usually settles the entitlement question along with everything else.
And the separate question of whether it was genuine
Redundancy pay is about what is owed on the way out. Whether the redundancy was genuine is a different question with a much shorter clock: an unfair dismissal application in the national system must be lodged within twenty-one days of the dismissal taking effect. Negotiating over the package does not pause that period, and by the time a payment dispute is resolved the window has often closed.
This guide is general information about the law in Australia and Western Australia and is not legal advice for your situation. Awards, enterprise agreements and indexed tax limits vary and should be checked against your own circumstances.