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When making an employee redundant, it is important you understand the current legal requirements as a small business owner in 2025. With evolving workplace laws and updated redundancy guidelines, knowing your obligations will help you manage the process smoothly and fairly.
As a small business owner, you may not have to pay redundancy if you qualify under the Fair Work Act; however, you are still required to provide proper notice and meet all legal obligations. It is crucial to stay informed of any changes, such as those outlined in our Legal Requirements for Starting a Business guide.
Don’t know where to start? Here’s what you need to know to ensure your redundancy process meets the updated standards for 2025.
Redundancy
Redundancy occurs when:
- An employee’s job is no longer needed, or
- The business the employee was working for becomes bankrupt or insolvent
This situation may arise as a result of factors such as new technology, changes in market demand, or a business restructure – issues that are particularly relevant in today’s dynamic 2025 business landscape.
Genuine Redundancy
When making an employee redundant, the redundancy must be genuine. This is essential to ensure that the employee cannot claim unfair dismissal later.
A genuine redundancy occurs when:
- The employee’s job does not need to be done by anyone once they have been made redundant, and
- The employer has followed all relevant modern award requirements and/or the terms set out in any applicable agreement between the employee and employer (more on this later)
A redundancy is not genuine in any of the following scenarios:
- The job you have made redundant is still required to be performed by someone,
- The relevant award or agreement requirements have not been followed, or
- The employee could reasonably have been redeployed to another role within your small business
For a broader understanding of these concepts, check out our article on redundancy to learn more about the general principles and updated practices.
Do Small Businesses Have To Pay Redundancy Pay?
Many small businesses do not have to pay redundancy when making an employee redundant. Under the current Fair Work Act, your business is considered a ‘small business’ if you employ fewer than 15 people at the time the redundancy takes effect.
Although these small businesses are not compelled to pay redundancy, certain industry modern awards still impose an obligation. To gain a better understanding of how modern awards impact your responsibilities, refer to our Modern Award Analysis resource.
These awards include:
- Joinery and Building Trades Award 2010
- Manufacturing and Associated Industries and Occupations Award 2010
- Textile, Clothing, Footwear and Associated Industries Award 2010
- Timber Industry Award 2010
- Black Coal Mining Industry Award 2010
- Building and Construction General On-Site Award 2010
- Mobile Crane Hiring Award 2010
- Plumbing and Fire Sprinklers Award 2010
For example, the Textile, Clothing, Footwear and Associated Industries Award 2010 currently requires that small business owners pay the following redundancy pay (as updated for 2025):
| Employee’s Period of Continuous Service With the Employer on Termination | Redundancy Pay Period |
| Less than 1 year | Nil |
| At least 1 year but less than 2 years | 4 weeks |
| At least 2 years but less than 3 years | 6 weeks |
| At least 3 years but less than 4 years | 7 weeks |
Fair Work Australia’s Redundancy Pay Calculator can help you determine if you are required to pay redundancy when making your employee redundant.
It is advisable that you review all steps in the redundancy process to ensure compliance with the latest Fair Work regulations. For more detailed guidance on managing your legal obligations, refer to our Legal Requirements for Starting a Business resource.
Once you have determined that your business is a small business and not required to pay redundancy, you must still ensure:
- That the redundancy is genuine, and
- That the redundant employee receives all unpaid wages and, where applicable, accrued long service or annual leave
Other instances where you may not have to pay redundancy include:
- Employees who have worked in your business for less than 12 months
- Employees employed only for:
- A specific period of time
- A specific task or project
- A particular season
- Employees terminated because of serious misconduct
- Casual employees
- Trainees employed only for the duration of a training agreement
Redundancy Notice Period
Generally, you are required to give your employee notice when making them redundant.
National Employment Standards set the minimum notice period an employer must provide when making an employee redundant:
| Period of Continuous Service | Minimum Notice Period |
| 1 year or less | 1 week |
| More than 1 year – 3 years | 2 weeks |
| More than 3 years – 5 years | 2 weeks |
| More than 5 years | 4 weeks |
NB: An additional week of notice is provided to employees over 45 years old who have completed a two-year period of continuous service with your business.
Although you will generally be required to provide notice, there are circumstances where notice may not be necessary. These include when:
- You have paid the employee’s full pay rate as if they had worked the minimum notice period,
- The employee is a casual worker,
- The employee was employed only for a specific time, task, or season,
- The employee has been terminated for serious misconduct, or
- The employee is working on a daily hire basis in the building and construction or meat industries.
Check out Fair Work Australia’s Notice and Redundancy Calculator to determine precisely how much notice you are required to provide.
How Do I Provide Notice?
If you are required to provide notice to the employee you are making redundant, it must be given in writing.
It is vital that the employee receives the notice of termination. You can deliver notice in several ways, including:
- Personally handing it over,
- Leaving it at the employee’s last known address, or
- Sending it by pre-paid post to the employee’s last known address
It is also advisable to retain proof of delivery to avoid any future disputes.
Any Questions?
Making an employee redundant can be a challenging process for all involved. We understand the difficulties you face when having to let an employee go, and we are committed to helping you follow the correct steps for a smooth transition.
Additionally, keeping thorough documentation and seeking specialist legal advice-such as through our comprehensive Employment Contract Services-can help mitigate potential disputes. For further practical advice tailored to small business needs, you may also want to review our insights on Operating as a Sole Trader and the considerations outlined in our Sole Trader vs Company guide.
If you have any further questions regarding making an employee redundant or require personalised legal assistance, we’re here to help! Reach out to our team today at team@sprintlaw.com.au or give us a call on 1800 730 617.
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