Do Casual Employees Get Redundancy Pay in Australia? Employer’s Compliance Guide

When business conditions shift and you need to reduce headcount, it’s normal to worry about doing the right thing by your people and the law. One of the most common questions we hear is simple but important: do casual employees get redundancy pay in Australia?

You might have long term casuals who feel like part of the furniture, regular rosters, and strong relationships. That’s why this area can feel confusing. The rules are specific, and there are a few key exceptions and obligations employers often overlook.

In this guide, we’ll clarify when redundancy pay is required, how the rules apply to casuals (including long term casuals), where small business exemptions fit in, and the steps you should take to stay compliant and fair.

Redundancy Pay In Australia: The Basics

Redundancy pay (sometimes called severance or a redundancy payout) is a monetary entitlement for eligible employees when their job is no longer required due to changes in the business, such as restructuring, downsizing or closure.

Under the Fair Work Act 2009, redundancy pay entitlements are set out in Section 119. These entitlements apply to eligible employees based on their period of continuous service, unless an exclusion applies.

Two key exclusions many employers miss:

• Small business employers (fewer than 15 employees) are generally not required to pay redundancy pay (Section 121).
• Certain categories of employees are excluded from the redundancy provisions entirely (Section 123), which includes casual employees.

If you’re calculating what a redundancy payment might look like for eligible staff, it can help to run the numbers with a redundancy calculator early in your planning.

Are Casual Employees Entitled To Redundancy Pay?

In short, no. Under the National Employment Standards (NES), casual employees are excluded from redundancy pay. This exclusion is found in Section 123 of the Fair Work Act, which states that the redundancy pay provisions do not apply to casual employees.

Why? Casual employment is designed for flexibility. There’s no firm advance commitment to ongoing work, and hours may vary. The casual loading compensates for the lack of paid leave and other entitlements, and redundancy pay under the NES isn’t part of the casual package.

That said, there are important nuances to check before you make final decisions:

• Awards, enterprise agreements or contracts: An industrial instrument or written contract may provide more generous entitlements than the NES. If an award, enterprise agreement, company policy or contract promises a redundancy payment to casuals, you must honour it.
• Misclassification risks: If a worker labelled “casual” actually has a firm advance commitment to ongoing work, they may be a permanent employee in reality. In that case, they could potentially be entitled to redundancy pay as a permanent employee (more on this below).
• Small business exemption for permanent staff: Even if a permanent employee would usually receive redundancy pay, Section 121 exempts small business employers from redundancy pay obligations.

Long Term Casuals, Misclassification And Casual Conversion

The term “long term casual” is commonly used for casuals who have worked regularly and systematically for 12 months or more. This status can unlock certain rights (like access to unfair dismissal protections and requests for flexible work), but it does not create an entitlement to redundancy pay under the NES.

What if a “casual” looks permanent in practice?

Sometimes a casual works predictable hours, appears on stable rosters, and has an ongoing expectation of work. If that’s the case, there’s a real risk they’ve been misclassified and are, in substance, a part-time or full-time employee.

If a worker is found to be permanent in reality, they may have permanent employee entitlements, which can include redundancy pay (subject to the small business exemption and other requirements). A classification review can save you from larger underpayment or liability issues down the track.

Casual conversion obligations

Workplaces often need to consider offers of conversion to permanent employment after 12 months for eligible casuals. Keeping clear records of offers and responses helps demonstrate compliance. If you’re reassessing status and planning structural changes, make sure your employment contracts and internal processes reflect the true nature of your arrangements.

Other Exceptions And Common Traps For Employers

Redundancy decisions can move quickly, but taking time to work through these checks reduces the chance of disputes:

1) Small business redundancy exemption (Section 121)

If you’re a small business employer (fewer than 15 employees), the NES generally does not require you to pay redundancy pay to permanent employees. Still, you must consider notice (or payment in lieu of notice) and any consultation obligations under an award or enterprise agreement. Also check if any contract promises a payout above the NES.

2) Industrial instruments and contracts

Modern awards, enterprise agreements, and contracts can create additional obligations. It’s common to see consultation clauses that apply to all employees (including casuals) when major workplace change is proposed. Always review the relevant instrument before making announcements.

3) Genuine redundancy and unfair dismissal

To reduce the risk of unfair dismissal claims for eligible employees, ensure the redundancy is “genuine.” Broadly, this means the job is no longer required, redeployment has been considered, and consultation obligations have been met. Section 389 of the Fair Work Act explains this test in more detail, and you can read more in our guide to Section 389.

4) Notice requirements (casuals vs permanents)

Under Section 123, casual employees aren’t entitled to NES notice of termination. However, awards, enterprise agreements, or contracts may include minimum engagement periods, roster change rules, or practical notice arrangements. For permanents, plan ahead using a simple approach to calculating notice periods to avoid last‑minute issues.

5) Consultation duties

Consultation clauses in awards or enterprise agreements typically apply to “major workplace change,” which includes redundancies. These duties often apply regardless of employment type. Failing to consult properly is a common (and avoidable) compliance problem.

Ending Casual Engagements: Notice, Consultation And Best Practice

While the NES does not require redundancy pay or statutory notice for casuals, there are still legal and practical steps to get right when engagements end due to changed business needs.

Check any award or enterprise agreement

Some awards set expectations around how rosters are changed or shifts are cancelled. If your casuals are covered by an award or agreement, confirm whether there are rules about consultation, roster alterations, minimum engagements, or any other requirement that affects how you bring the engagement to an end. If you’re not sure, it’s worth a quick review of the notice requirements for casual employees so you know what applies in your workplace.

Use clear, respectful communication

Even if there’s no legal obligation to provide notice, it’s best practice to explain the business reasons for the change early and transparently. This helps maintain trust, protects your employer brand, and reduces the risk of complaints.

Document decisions and rationale

Keep short records of the business case for change, how roles were assessed, and any redeployment considerations. This will be helpful if questions arise later about whether a redundancy was genuine or whether processes were fair.

Final pay and entitlements

For casuals, ensure all worked hours are paid, including any applicable loadings and allowances. For permanent staff affected by redundancy, consider whether notice applies, or whether you’ll make payment in lieu of notice, and then check if redundancy pay is payable under the NES (unless you are a small business employer). Keep an eye on accrued leave and any outstanding allowances as part of final pay.

Practical Steps To Stay Compliant (And Fair) When Roles Change

Whether or not redundancy pay applies, the following steps help you meet your obligations and reduce risk across the board.

1) Confirm who is covered by the NES redundancy provisions

• Identify casuals, contractors, and permanent employees. Only eligible permanents can receive NES redundancy pay, subject to exclusions.
• Apply the small business exemption (Section 121) where appropriate.
• Review any award, enterprise agreement or contract that could provide extra entitlements.

2) Review classification and work patterns

• Assess whether any “casual” has a firm advance commitment to ongoing work (predictable hours, ongoing rosters, long-term regularity). If so, consider whether reclassification or conversion is appropriate.
• Keep accurate records of engagement terms, rosters, and communications about ongoing work expectations.

3) Check consultation obligations

• Most modern awards and enterprise agreements require consultation about major workplace change (including redundancies).
• Consultation usually involves notifying affected employees, discussing the proposed change, and considering measures to avert or mitigate adverse effects.

4) Consider redeployment and the genuine redundancy test

• Before finalising redundancies for eligible employees, consider whether there is suitable alternative employment within your business or an associated entity.
• Document your efforts. This supports compliance with the genuine redundancy test and helps if there’s an unfair dismissal claim later.

5) Plan notice and final payments

• Use a straightforward process for calculating notice for permanent employees and decide whether to give working notice or make payment in lieu.
• For eligible permanent staff, calculate redundancy pay under Section 119 or confirm the small business exemption applies. A quick run-through with a calculator can help you budget.
• Ensure accrued entitlements (e.g. annual leave) are paid out correctly.

6) Use robust documents and processes

• Issue clear, up-to-date employment contracts that reflect the true nature of each engagement (casual, part-time or full-time) and set expectations around rosters, pay and termination.
• Have a practical letter and checklist process for separations. Many employers lean on an employee termination documents suite so they don’t miss required steps or communications.
• Train managers on consultation and respectful communication to avoid missteps during a stressful period.

Key Takeaways

• Casual employees are excluded from NES redundancy pay under Section 123 of the Fair Work Act, even if they are long term casuals with regular hours.
• Permanent employees may be entitled to redundancy pay under Section 119, but small business employers (fewer than 15 employees) are generally exempt under Section 121.
• Check awards, enterprise agreements and contracts: they can provide entitlements above the NES, including for casuals in rare cases.
• If a “casual” has a firm advance commitment to ongoing work, review their classification. Misclassification can lead to claims for permanent entitlements.
• Genuine redundancy requires that the job is no longer required, consultation has occurred, and redeployment has been considered; see the framework in Section 389.
• For casual employees, there’s no NES notice requirement, but awards or agreements can set practical rules for rosters and minimum engagements. Clear communication and tidy records go a long way to preventing disputes.
• Get your paperwork right: tailored Employment Contracts, sensible termination letters, and a structured process help you stay compliant and respectful during change.

If you need tailored advice on managing redundancies or ending casual engagements compliantly, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.