QLD Redundancy Pay: What Employers Need to Know

Restructuring is a normal part of running a business. Markets shift, technology changes, new products launch - and sometimes roles simply aren’t needed anymore.

If you’re a Queensland employer, you’ll want to make sure you handle redundancy pay and process correctly. Getting it wrong can be costly, damage morale and reputation, and expose you to legal claims.

In this guide, we’ll walk through how redundancy pay works in QLD (for most private sector employers covered by the national system), what your consultation and notice obligations look like, how to calculate entitlements, and the practical steps to manage redundancies fairly and compliantly.

What Counts As A Genuine Redundancy In Queensland?

Before you think about the dollars, make sure the redundancy is “genuine.” Under the Fair Work framework, a termination is a genuine redundancy when:

• The job is no longer required to be performed by anyone (for example, you’ve automated a function, closed a location, or restructured), and
• You’ve complied with any consultation obligations in the applicable modern award or enterprise agreement, and
• It wasn’t reasonable to redeploy the employee within your business or an associated entity.

If these elements aren’t met, the termination could be treated as a dismissal for other reasons, which may open the door to unfair dismissal claims. Redundancy is about the role, not the person in it.

A quick example: If you close your Brisbane showroom and move fully online, your in-store Sales Assistant role might be redundant. But if there’s a vacancy in your online customer team that the assistant could reasonably perform with some training, redeployment should be considered before proceeding with redundancy.

How To Calculate Redundancy Pay In QLD (Step By Step)

For most private sector businesses in Queensland, redundancy pay comes from the National Employment Standards (NES) in the Fair Work Act. Some employees may be covered by an enterprise agreement or contract with higher entitlements, so always check those instruments first.

Step 1: Confirm Who Is Eligible

Redundancy pay under the NES generally doesn’t apply to:

• Casual employees
• Employees with less than 12 months’ continuous service
• Apprentices
• Employees on a fixed-term contract that is ending
• Employees of a small business (fewer than 15 employees at the time of dismissal)

If an award, enterprise agreement or contract provides more generous redundancy pay, you must follow that.

Step 2: Use The NES Redundancy Pay Table

The NES sets out a scale of weeks of pay based on the employee’s continuous service with you. In short, the entitlement starts at 4 weeks for 1-2 years of service and increases with service. After 10 years, it’s 12 weeks (note it reduces from 16 at 9-10 years to 12 at 10+ years under the NES).

If you need a refresher on the methodology and common edge cases (like part-time arrangements or earlier service with associated entities), see our guide on how to calculate your redundancy payment.

Step 3: Determine The “Week’s Pay”

Redundancy pay is calculated using the employee’s base rate for ordinary hours (excluding overtime, penalties, allowances and bonuses) at the time of termination. Award or agreement rules may alter this, so check them carefully.

Step 4: Factor In Partial Years, Caps Or Variations

• Partial years: The NES table looks at completed years. Some agreements allow pro‑rata for part years - check the instrument.
• Variations: The Fair Work Commission can reduce redundancy pay in certain circumstances, such as where you’ve offered suitable alternative employment.
• High-income employees: Contracts can’t reduce NES minimums, but they may include above-minimum redundancy benefits. Always apply the most generous applicable entitlement.

Small Business In QLD: Do You Owe Redundancy Pay?

Under the NES, small business employers with fewer than 15 employees (including regular and systematic casuals, and employees of associated entities) are generally exempt from paying redundancy pay. You still need to provide the required notice (or pay in lieu), consult where an award or agreement applies, and pay out accrued entitlements. If your contracts or enterprise agreements promise redundancy pay even as a small business, those commitments still apply.

Notice, Consultation And Redeployment: Your Legal Obligations

Redundancy isn’t just about the final number. The process matters. Here are the key obligations most QLD employers need to tick off.

Consultation

If a modern award or enterprise agreement covers the employee, you must consult. This usually involves:

• Notifying employees as soon as a definite decision is made to introduce major change likely to have significant effects (e.g. job losses)
• Providing relevant information about the change, the expected effects and measures to avert or mitigate adverse effects
• Genuinely considering and responding to matters raised by employees (and any representatives)

Skipping proper consultation can put a valid business decision at risk. Build realistic consultation time into your project plan.

Redeployment

You need to explore whether it’s reasonable to redeploy affected employees within your business or associated entities. Reasonableness depends on factors like the employee’s skills, location, pay, seniority and whether training could be provided.

Document the roles you considered, why they weren’t suitable, and any offers made. A transparent redeployment process supports a finding of genuine redundancy if challenged.

Notice (Or Pay In Lieu)

Separate to redundancy pay, the NES sets minimum notice periods based on service. You can require employees to work their notice, or provide payment in lieu of notice at their full pay rate for the notice period you owe.

If an award, agreement or contract specifies longer notice, follow the longer period. Remember that notice and redundancy pay are discrete entitlements - most employees who qualify for redundancy will receive both.

What Goes In The Final Pay Packet? (Leave, Super And Tax)

Final pay wraps up everything owed on termination. In a redundancy context, expect to include:

• Unpaid wages up to the end date
• Payment in lieu of notice (if applicable)
• Redundancy pay (if applicable)
• Accrued but untaken annual leave (and annual leave loading if applicable)
• Long service leave (QLD rules apply for national system employers in QLD - eligibility depends on service; some employees may be entitled to a pro‑rata payout)
• Any entitlements under an enterprise agreement or contract (e.g. time off in lieu balances if the instrument requires payout)

Timing matters. Many awards and agreements require final pay within a set time after termination. Build that into your checklist to avoid late payment issues.

Superannuation On Termination Amounts

Do you pay super on redundancy pay? Generally, superannuation is not payable on genuine redundancy pay, but it is payable on ordinary time earnings, which can include notice paid out. The rules can be nuanced, so cross‑check your calculations against your instrument and the Superannuation Guarantee framework. We break down common scenarios in our guide on superannuation on termination payments.

Tax Treatment

Genuine redundancy payments can attract concessional tax treatment up to certain caps, while other components (like unused leave) are taxed differently. While we don’t provide tax advice here, it’s wise to have your payroll provider or accountant confirm the correct breakdown before you issue the final payslip and PAYG payment summary details.

Final Pay Checklist

To keep it tidy, use a simple checklist that covers components, calculations, approvals and timing. Our guide to calculating final pay is a handy reference for employers.

Practical Tips And Documents To Manage Redundancies Fairly

Beyond the legal minimums, a clear and fair process helps your team feel respected - and reduces legal risk.

Plan The Timeline And Communications

• Set your change roadmap early, including consultation windows, selection processes, notice periods and exit dates.
• Prepare scripts, FAQs and written notifications so messages are consistent and compassionate.
• Nominate a decision‑maker and a note‑taker for meetings to keep accurate records.

Make Selection Criteria Objective

If you’re reducing headcount in a team (rather than abolishing the entire function), selection criteria should be objective, job‑related and consistently applied. Document how you applied criteria such as skills, qualifications, performance, and operational needs. Avoid criteria that could be discriminatory.

Align Contracts, Policies And Instruments

Check for any contractual or agreement‑based commitments that go beyond the NES, such as additional redundancy pay, enhanced notice periods or consultation processes.

• Employment contracts: Do they include redundancy benefits, garden leave, or mobility clauses? Ensure your Employment Contract terms and the instruments align.
• Awards/agreements: Confirm you’ve hit all consultation steps and timelines.
• Policies: A well‑drafted Redundancy or Change Management Policy keeps your approach consistent.

Offer Support Where You Can

Outplacement services, job search support or reference letters aren’t legal requirements, but they can make a difficult process smoother for departing team members and those who remain.

Use The Right Documents

Having the right templates and guidance makes a big difference. Consider:

• Redundancy advice: Get tailored advice on your selection, consultation and payment approach before you act.
• Redundancy Document Suite: Letters, checklists and scripts that reflect your obligations and help your managers implement them correctly.
• Employee Termination Documents Suite: General termination letters and checklists for non‑redundancy scenarios, so you keep processes consistent across the board.

If your restructure involves broader contract changes, it’s worth reviewing your workforce mix (e.g. casuals, contractors and permanent staff) and updating your employment documentation so it matches how people actually work. This is also a good time to ensure your team policies are up‑to‑date and easy to follow.

Common Pitfalls To Avoid

• Skipping consultation because the decision feels urgent - build a short but genuine consultation period into your timeline.
• Not considering redeployment across associated entities - remember to assess all reasonable options and document your review.
• Confusing redundancy with performance issues - if performance is the driver, follow your performance management process instead.
• Withholding entitlements to offset perceived debts - proceed carefully here and review our guide on withholding pay from employees before making deductions.

When You Might Use Payment In Lieu Of Notice

If you need to wind changes in quickly, paying out notice can help you implement new structures without prolonged handovers. If you go down this path, make sure the payment matches the minimum notice period and the correct pay rate as explained in our payment in lieu of notice guide.

Key Takeaways

• Redundancy in QLD is mostly governed by the national system: ensure the redundancy is genuine, consult where required, and explore redeployment before ending employment.
• Use the NES redundancy pay scale unless an award, enterprise agreement or contract provides more generous entitlements; small businesses (fewer than 15 employees) are generally exempt from redundancy pay.
• Employees who qualify usually receive both notice (or pay in lieu) and redundancy pay, plus accrued leave and any long service leave owed in their final pay.
• Super is typically not payable on genuine redundancy amounts, but it can apply to notice paid out; confirm your calculations against the rules on super on termination payments.
• A clear, documented process - with consultation, objective selection, and proper records - reduces risk and helps protect your business.
• Set yourself up with the right tools: use a structured final pay process, refer to our guide on calculating final pay, and consider tailored support like our Redundancy Document Suite and Redundancy advice.

If you’d like a consultation on managing redundancy pay in QLD, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no‑obligations chat.