When an employee is made redundant, the National Employment Standards set the minimum redundancy pay in weeks, scaled by length of service with the employer. The full NES redundancy table from section 119 of the Fair Work Act is below, followed by the rules employers misread: the step-down after 10 years, the base rate basis, and the small business exemption that covers less than many employers think. Brookvale HR Solutions advises employers on redundancy entitlements and restructures as part of employee management advisory work, handled personally by Daniel Holbrook.
The NES redundancy pay table (section 119)
Redundancy pay under the NES is calculated at the employee's base rate of pay for their ordinary hours of work, using this scale:
| Continuous service with the employer | Redundancy pay |
|---|---|
| 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 |
| At least 4 years but less than 5 years | 8 weeks |
| At least 5 years but less than 6 years | 10 weeks |
| At least 6 years but less than 7 years | 11 weeks |
| At least 7 years but less than 8 years | 13 weeks |
| At least 8 years but less than 9 years | 14 weeks |
| At least 9 years but less than 10 years | 16 weeks |
| At least 10 years | 12 weeks |
Source: Fair Work Act 2009, section 119(2). The Fair Work Ombudsman publishes the same table. For a dollar figure on a specific employee, the redundancy calculator applies this scale to their pay and service.
Two rows catch employers out. Seven years of service pays 13 weeks, not 12 (the scale is not a smooth two-week ladder). And the entitlement peaks at 16 weeks for nine years of service, then steps down.
Why redundancy pay drops to 12 weeks after 10 years
The step-down is deliberate, not a drafting error. The Fair Work Ombudsman explains that the entitlement drops after 10 years of service because long service leave is usually paid out at the same time; the scale derives from the Australian Industrial Relations Commission's 2004 Redundancy Case. Payroll teams who assume the table keeps climbing overpay at 10+ years, and employers who notice the drop late sometimes underpay the 9-to-10-year band. Both errors come from not reading item 10.
Base rate of pay, not full rate
The amount of redundancy pay is the redundancy pay period multiplied by the employee's base rate of pay for ordinary hours. It excludes incentive-based payments and bonuses, loadings, monetary allowances, overtime and penalty rates.
Notice of termination is the opposite. Payment in lieu of notice must be paid at the full rate of pay, including those amounts, as the FWO's notice of termination and redundancy pay fact sheet sets out. When a redundancy is paid out, payroll applies two different rate bases in the same final pay: full rate for the notice component, base rate for the redundancy component.
Who is entitled to redundancy pay under the NES
An employee will receive redundancy pay under the NES when their job is made genuinely redundant and:
- They have at least 12 months of continuous service (periods of casual employment do not count, and unpaid leave does not count toward service although it does not break it)
- Their employer is not a small business employer (15 or more employees by headcount)
- They are in the national workplace relations system
Excluded regardless of service: casual employees, employees engaged for a specified period, task or season, employees dismissed for serious misconduct, apprentices, trainees on fixed training arrangements, and employees covered by an industry-specific redundancy scheme in a modern award (the building and construction industry is the well-known example; those award schemes apply instead of the NES scale and can reach employers the NES exempts).
An employer can also apply to the Fair Work Commission under section 120 to have the redundancy pay reduced (potentially to nil) where it has obtained other acceptable employment for the employee or cannot pay. That path exists only for the NES entitlement, not for award or agreement entitlements.
The small business exemption, and what it does not cover
A small business employer (fewer than 15 employees at the relevant time, counting the employee being made redundant, other employees being dismissed at the same time, regular and systematic casuals, and employees of associated entities) does not have to pay redundancy pay under the NES.
The exemption ends there. A small business making a role redundant must still:
- Give notice of termination under section 117, or payment in lieu at the full rate. The notice period obligation has no small business exception
- Comply with any consultation clause in the applicable award or enterprise agreement
- Ensure the redundancy is genuine, because the unfair dismissal jurisdiction still applies
- Pay out all other final pay entitlements, including unused annual leave
There is also a narrow reversal: where a business became a small business because of insolvency-connected terminations (bankruptcy or liquidation), affected employees can remain entitled to NES redundancy pay.
For the process side (the genuine redundancy test, consultation obligations and redeployment), see the step-by-step redundancy guide. This page owns the table; that guide owns the procedure. If you are planning a restructure and want the entitlements costed before you commit, call Daniel on 1300 23 44 23.
The NES redundancy table is short, but the errors around it are predictable: extrapolated rows instead of read rows, full rate instead of base rate, and a small business exemption stretched to cover obligations it never touched. Cost the table correctly before any restructure conversation starts.
