Alex is Sprintlaw’s co-founder and principal lawyer. Alex previously worked at a top-tier firm as a lawyer specialising in technology and media contracts, and founded a digital agency which he sold in 2015.
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Planning a redundancy is never easy, and it can feel even more sensitive when the employee is over 45. As an employer, your obligations don’t change dramatically because of an employee’s age, but there are a few important nuances you need to get right - from notice periods to consultation, redeployment and avoiding age discrimination.
This guide walks you through what “redundancy over 45” means in practice for Australian employers, how to run a compliant process, and how to calculate final payments with confidence.
What Does “Redundancy Over 45” Actually Mean For Employers?
There isn’t a separate “over 45” redundancy regime under the National Employment Standards (NES). Redundancy entitlements primarily depend on continuous service, whether your business is a small business employer, and whether the redundancy is genuine.
However, age does intersect with termination entitlements in one key way: notice. If an employee is aged 45 or over and has at least two years of continuous service, the NES adds an extra week to the minimum notice period (or payment in lieu). So, while redundancy pay itself is not increased by age under the NES, notice may be.
Beyond that, your focus should be on conducting a fair, lawful process that meets consultation and redeployment obligations and avoids any decision-making that could be seen as age discrimination.
When Is A Redundancy Genuine?
Before you take any steps, confirm that the role is genuinely no longer required due to changes in your operational needs - for example, a restructure, cost-saving measures, automation, or closure of a function or location.
Three elements of a genuine redundancy
- The role is no longer required to be performed by anyone because of business changes.
- You have complied with any consultation obligations in an applicable award or enterprise agreement.
- It was not reasonable to redeploy the employee within your business or an associated entity.
If a redundancy is not genuine, the employee may have access to an unfair dismissal claim. When in doubt, it’s wise to get tailored Redundancy Advice before making final decisions.
Do Employees Over 45 Get Extra Entitlements?
Here’s how age interacts with key entitlements under the NES and common instruments:
Redundancy pay
Redundancy pay is based on the employee’s continuous service with your business (in weeks of pay). The NES does not add extra redundancy pay because an employee is over 45. The main exception is small business employers - if you have fewer than 15 employees (including the employee being made redundant and any associated entities), you’re generally exempt from NES redundancy pay, but other obligations still apply.
To budget accurately and avoid underpayments, check out a step-by-step guide on How To Calculate Your Redundancy Payment In Australia and, for a quick estimate, try the Redundancy Calculator.
Notice of termination
Under the NES, minimum notice varies with service length. If the employee is over 45 and has at least 2 years of continuous service, add one extra week to the minimum notice period. If you prefer not to have the employee work through their notice, you can provide Payment In Lieu Of Notice instead.
Consultation and redeployment
Most modern awards and enterprise agreements require consultation before final decisions are made - this includes explaining major change, exploring measures to avert or mitigate adverse effects, and considering redeployment options. These duties apply regardless of age, but you should be particularly careful to document a genuine search for redeployment where possible.
Tax treatment (high level)
Genuine redundancy payments can attract concessional tax treatment up to a capped amount; separate rules may apply depending on the employee’s age and years of service. Employers don’t “pay extra” because of age, but payroll processing must be accurate. Your accountant can confirm the PAYG withholding treatment on the final payout.
How To Manage A Redundancy Process Lawfully (Step-By-Step)
Every business is different, but the steps below reflect a typical, compliant pathway. Adjust them to your award/enterprise agreement and internal policies.
1) Build the business case
Confirm the restructure rationale and why the role is no longer required. Map the functions, alternatives (e.g. reallocation or job redesign), and potential redeployment options across associated entities. This groundwork helps evidence a genuine redundancy.
2) Check the instrument
Identify any applicable modern award or enterprise agreement and read the consultation clause. These clauses set out required steps, information you must provide, and timeframes. Failing consultation is a common - and avoidable - compliance risk.
3) Begin consultation
Invite the employee to a meeting, provide a letter outlining the proposed change and reasons, and seek feedback on ways to mitigate adverse effects. Be open to alternatives - part-time arrangements, different duties, or transfers may be reasonable where available.
4) Assess redeployment
Look across your business and any associated entities for suitable roles. Consider the employee’s skills, location, pay, seniority and training needed. If redeployment is reasonably available and refused, the redundancy may no longer be “genuine,” so document this stage carefully.
5) Confirm outcome and provide notice
Once consultation is complete and you’ve assessed redeployment, issue a final decision letter. Provide the required notice (or payment in lieu) and outline all final entitlements you will pay on termination.
6) Pay entitlements and provide support
Pay redundancy pay (if applicable), notice or payment in lieu, accrued annual leave, and any long service leave as required. Many employers also allow reasonable paid time off to attend interviews during the notice period, if requested. If you run multiple redundancies or a complex restructure, having a tailored Redundancy Document Suite can keep your letters, scripts and checklists consistent and compliant.
How Do You Calculate Final Payments?
Final payouts are a frequent source of disputes. A clear, consistent method protects your business and supports a respectful exit for the employee.
Redundancy pay (if applicable)
Use the NES scale based on years of continuous service, unless a more generous entitlement applies under a contract or enterprise agreement. Make sure you exclude periods that do not count as “service” (for example, certain unpaid leaves) when required.
Notice or payment in lieu
Calculate the correct minimum notice based on service, then add one extra week if the employee is 45+ with at least two years of service. If you require immediate exit, make the equivalent gross payment in lieu. You can cross-check the rules in our guide on Payment In Lieu Of Notice.
Accrued leave
Pay out all accrued but untaken annual leave. If the employee has long service leave, follow state or territory legislation and your applicable instrument to determine accrual and payout rules. A quick refresher on how these amounts work is in Annual Leave Payments.
Superannuation
Super is generally payable on ordinary time earnings; it may not be payable on redundancy pay, but can be payable on notice worked. There are nuances here - get payroll or accounting input if you’re unsure.
Tax and payroll
Ensure your payroll team correctly classifies genuine redundancy payments and applies the appropriate withholding. Keep detailed records of your calculations and documents provided to the employee.
For a practical roadmap to bring everything together, bookmark Calculating Final Pay and our explainer on How To Calculate Your Redundancy Payment In Australia.
Key Risks: Age Discrimination, Consultation And Record-Keeping
Redundancies are commonly challenged when the process looks unfair or poorly documented. These are the risk hot spots to watch closely.
Avoiding age discrimination
Do not use age as a selection criterion. Decisions should be tied to the role, not the person - for example, duplicated functions, team structure, or the capability genuinely required in the redesigned business. Keep a paper trail of your objective criteria and how you applied them across affected roles.
Consultation errors
Missed notices, rushed timelines, or failure to consider feedback are common missteps. Consultation is not just a courtesy - it’s a legal step in most awards and agreements. Provide written information, allow reasonable time for feedback, and genuinely consider proposals put forward.
Redeployment not considered
Courts and the Fair Work Commission expect employers to actively explore redeployment, including roles at other locations or in associated entities, where reasonable. Document your search and the reasons roles were or were not suitable.
Inconsistent communications
Mixed messages can undermine a genuine redundancy, especially if different managers say different things. Use consistent scripts and letter templates. If you don’t already have them, consider standardising with a Redundancy Document Suite so your team stays aligned.
Underpayments and calculation mistakes
Miscalculating notice, service length or payouts can lead to backpay claims and penalties. Use tools like the Redundancy Calculator for estimates and verify with your payroll team or seek advice where needed. If timelines are tight, building in Payment In Lieu Of Notice can help you meet operational needs while remaining compliant.
Key Takeaways
- There is no special “redundancy over 45” pay under the NES, but employees aged 45+ with at least two years of service get an extra week of minimum notice (or payment in lieu).
- A redundancy must be genuine: the role is no longer required, you have consulted as required, and redeployment isn’t reasonable.
- Follow a clear, documented process - build the business case, consult properly, assess redeployment, give correct notice and pay all final entitlements.
- Avoid age-based decision-making to reduce discrimination risk; use objective selection criteria and keep strong records.
- Calculate payouts carefully - redundancy pay (if applicable), notice, accrued leave, and correct tax and super - and cross-check with payroll.
- Templates and tailored guidance make a big difference; consider standardising documents and getting early advice for complex restructures.
If you’d like a consultation on managing a redundancy process in your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
