What Are Redundancy Entitlements? (2025 Updated)

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Big or small, all businesses may undergo changes – whether it be in size, structure, operations, or something else. While these changes can drive improvements and better outcomes for your business, they may also lead to some tough calls in 2025 and beyond.

Introducing new technology or machinery, relocating, or restructuring your business may result in an employee’s role becoming redundant.

As an employer, it is vital to understand your obligations when you need to make an employee redundant. This article outlines what your employees are entitled to under current laws and provides guidance on ensuring the processes you follow are fair and compliant in 2025.

When Is A Redundancy A Genuine Redundancy?

An employee may be made redundant in two main scenarios:

When their employer no longer needs the employee’s job to be done;
When the employer becomes insolvent or bankrupt.

The Fair Work Act 2009 defines “genuine redundancy” as follows:

(1) A person’s dismissal is considered a genuine redundancy if:

the employer no longer requires the person’s job to be performed by anyone due to changes in the operational needs of the business; and
the employer has complied with any consultation obligations stipulated in a modern award or enterprise agreement that applies to the employment.

(2) A person’s dismissal will not qualify as a genuine redundancy if it would have been reasonable for the employer to redeploy the employee within:

the employer’s enterprise; or
the enterprise of an associated entity of the employer.

Before making someone redundant, ensure that the employee’s position genuinely no longer needs to be filled and that you have followed the appropriate consultation processes required by any applicable award or enterprise agreement.

What Is Not A Genuine Redundancy?

A dismissal will not be regarded as a genuine redundancy if any of the following circumstances apply:

The job or role made redundant still needs to be done by someone – for example, if you hire another person to perform the role;
You have not followed the relevant consultation requirements set out in an award or enterprise agreement;
It would have been reasonable to redeploy or relocate the employee to another position within your business.

It is essential to follow fair processes when making an employee redundant, as failing to do so may lead to an unfair dismissal claim. If you find yourself facing such a claim, consider seeking legal advice to understand your options. You might also wish to review our guide on unfair dismissal.

What Is A Consultation Requirement?

Industry modern awards and registered agreements set out consultation processes that must be followed when your business undergoes significant changes, particularly if these changes may result in redundancies. As a business owner, you should initiate these consultation processes as soon as you decide to make changes that could affect employment.

Consultation requirements may include:

Notifying any employee who might be affected by the proposed changes;
Providing detailed information about the changes and their potential effects on employment;
Engaging in discussions with your employees to explore actions that can avoid or minimise any negative consequences;
Considering suggestions or ideas from your employees regarding the proposed changes.

Notice Of Termination

Most employees in Australia are covered by the National Employment Standards (NES) under the Fair Work Act, in addition to any other award, agreement, or contract provisions. In 2025, these standards continue to set the minimum notice periods or payment in lieu of notice when ending employment.

For all permanent employees (both full-time and part-time, but not casual employees), the NES stipulates the minimum notice period or, alternatively, payment in lieu of notice. In addition, the NES outlines the redundancy pay employees are entitled to upon termination.

Under the NES, you cannot dismiss an employee without either:

Providing the minimum period of notice; or
Paying in lieu of notice, which equals the amount the employee would earn if they worked through the notice period.

In most cases, notice should be given in writing. It is best practice to provide a letter detailing the employee’s last day of employment in accordance with the notice period.

The minimum notice period an employee is entitled to depends on their length of continuous service:

Period of continuous service on termination	Minimum notice period
1 year or less	1 week
Between 1-3 years	2 weeks
Between 3-5 years	3 weeks
5 years or more	4 weeks

Note: If the employee is over 45 years old and has completed at least 2 years of service, they are entitled to an additional week of notice.

There are certain circumstances in which no notice of termination is required, such as when:

the employees are casual;
the employment is for a specified period, task, or season (e.g. fixed-term contracts or seasonal work);
the employee is dismissed for serious misconduct;
there is a training arrangement for a set period;
the employees are daily hires in the building and construction or meat industries;
the employees are weekly hires in the meat industry, with terminations linked to seasonal factors.

How Much Redundancy Do I Need To Pay?

Employees who face genuine redundancy are entitled to receive redundancy pay based on their continuous period of service, calculated at their base pay rate for ordinary hours worked. This amount does not include incentive-based payments, bonuses, loadings, allowances, overtime, or penalty rates.

Period of continuous service on redundancy	Redundancy pay
Less than one year	Nil
Between 1-2 years	4 weeks
Between 2-3 years	6 weeks
Between 3-4 years	7 weeks
Between 4-5 years	8 weeks
Between 5-6 years	10 weeks
Between 6-7 years	11 weeks
Between 7-8 years	13 weeks
Between 8-9 years	14 weeks
Between 9-10 years	16 weeks
10 years or more	16 weeks

Who Doesn’t Get Redundancy Pay?

Some employees are not entitled to redundancy pay if their job is made redundant. You do not need to pay redundancy if:

They have less than 12 months of continuous service;
They were employed for a specified period, season, task, or project;
They are casual employees;
They are an apprentice or trainee.

There are also additional scenarios in which small businesses – defined as organisations employing fewer than 15 employees (excluding casuals unless they are employed regularly) – may be exempt from paying redundancy.

Do Small Businesses Need To Pay Redundancy Pay?

In most cases, small businesses are not required to pay redundancy; however, certain industries under modern awards do impose such obligations. It is critical to review your relevant modern award to determine exactly what is required.

Are you a small business? Remember, for redundancy purposes, “small business” refers to organisations employing fewer than 15 permanent part-time and full-time employees (casuals are only counted if employed on a regular and systematic basis).

Modern Awards

Some industry modern awards mandate that even small businesses pay redundancy pay. These include:

Black Coal Mining Industry Award 2010
Building and Construction General On-Site Award 2010
Joinery and Building Trades Award 2010
Manufacturing and Associated Industries and Occupations Award 2010
Mobile Crane Hiring Award 2010
Plumbing and Fire Sprinklers Award 2010
Textile, Clothing, Footwear and Associated Industries Award 2010
Timber Industry Award 2010

For more detailed guidance on how modern awards affect redundancy obligations, please refer to our Modern Award Analysis.

What If An Employee Brings An Unfair Dismissal Claim Against Me?

If a redundancy is genuine and all proper consultation and notice procedures have been followed, you will generally be in a strong position to defend an unfair dismissal claim. It is always advisable to keep written records of all processes and communications regarding the redundancy, as these documents can be crucial in demonstrating that you have acted fairly and lawfully.

If you are facing an unfair dismissal claim, seeking professional legal advice tailored to your circumstances is highly recommended.

Alternatives and Additional Considerations

Before finalising redundancy decisions in 2025, it is worthwhile to explore alternative strategies such as redeployment, role restructuring, or flexible working arrangements. Retaining valued staff can sometimes be more beneficial than redundancy, and these options can help mitigate legal risks. For insights on organisational changes, check out our Business Structure Guide and our detailed Modern Award Analysis.

In addition, remember that maintaining transparent communication and following proper consultation processes – as detailed in our Regulatory Requirements for Businesses guide – can help ensure fairness in your decision-making process while safeguarding workplace morale.

Need Help?

If you’re looking for advice on managing workforce changes and ensuring you meet your legal obligations as an employer in 2025, speaking to a lawyer can help you explore your options. Get in touch with our team of expert lawyers on 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations consultation.

Kayleigh Yap

Kayleigh is a graduate in Arts and Law from the University of New South Wales. With an interest in human rights and intellectual property law, she has experience working in communications and marketing for small businesses and not-for-profits.

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