Redundancy Pay in Australia: The Full NES Scale Explained (Including the Drop at 10 Years)

Redundancy pay under the Fair Work Act 2009 (Cth) is a separate National Employment Standards entitlement calculated on a statutory scale by length of service, from 4 weeks at 1 year up to 16 weeks at 9-10 years, then dropping deliberately to 12 weeks at 10 years and beyond.

This article addresses redundancy pay under s 119 of the Fair Work Act 2009 (Cth), one of the National Employment Standards, current as at 19 July 2026. It does not address notice of termination, a separate NES entitlement covered on recordinglaw.com's notice of termination guide, or state-based long service leave.

What Genuine Redundancy Means

Redundancy pay is only payable where employment ends for specific reasons defined in s 119(1): the employer no longer requires the job to be done by anyone, other than through the ordinary and customary turnover of labour, or the employer becomes insolvent or bankrupt. This is narrower than "the employee was let go." A dismissal for poor performance or misconduct is not a redundancy, and neither is a role that continues to exist but is simply given to someone else. "Genuine redundancy" is also a distinct concept used elsewhere in the Fair Work Act, under s 389, to exclude a dismissal from the unfair dismissal jurisdiction where the job genuinely no longer exists, the employer complied with any applicable consultation obligation, and redeployment within the employer's enterprise or an associated entity was not reasonably available. A dismissal that is not a genuine redundancy under that separate test can still potentially found an unfair dismissal claim even where some redundancy pay is also owed.

The NES Redundancy Pay Scale

Section 119(2) sets out a table that calculates redundancy pay by an employee's period of continuous service with the employer, at the employee's base rate of pay for their ordinary hours of work. Continuous service for this purpose does not include periods of employment as a casual employee (s 119(3)).

The Drop at 10 Years Is Deliberate, Not an Error

The scale rises steadily from 4 weeks to a peak of 16 weeks at 9 to 10 years' service, then falls to 12 weeks at 10 years and beyond. This surprises many readers who expect the entitlement to keep climbing, and it is easy to assume the table contains a typographical error. It does not; s 119(2) is drafted this way deliberately. The commonly understood policy reason is that, by around the 10-year mark, an employee in many jurisdictions is starting to become eligible for state or territory long service leave, a separate paid entitlement discussed on recordinglaw.com's Australian employment law hub, so Parliament calibrated the redundancy scale on the view that a long-serving employee's overall statutory entitlements were not intended to keep compounding indefinitely on this particular scale. Whatever the underlying policy reasoning, the practical point for a reader doing the sums is the same either way: redundancy pay at exactly 10 years' service is lower than it was in the year before, and that is the law as enacted, not a drafting mistake to query.

Small Business Exemption

Section 121(1)(b) excludes an employer from the NES redundancy pay obligation altogether where the employer is a small business employer, defined the same way as elsewhere in the Fair Work Act as one employing fewer than 15 employees, counted by head count including regular casuals and with associated entities treated as one employer. This means an employee made redundant by a genuinely small employer may not be entitled to statutory redundancy pay at all, although an applicable award, enterprise agreement or contract can still provide for it even where the NES does not require it.

There is a narrow carve-out in s 121(4). Even where an employer was a small business employer at the time of termination and so was not required to pay redundancy pay under s 119, an employee is nonetheless entitled to redundancy pay if the employer is later bankrupt or in liquidation (other than only because of a members' voluntary winding up), and the employer became a small business employer because of the very terminations in question, provided those terminations happened within a defined window before the bankruptcy or liquidation, generally the 6 months before the employer became insolvent or before an insolvency practitioner was appointed. This provision exists to stop an employer sliding under the 15-employee threshold through the redundancies themselves and then avoiding the redundancy pay obligation that would otherwise have applied.

Genuine Redundancy vs Unfair Dismissal

Redundancy pay and unfair dismissal are assessed under different provisions and can each apply, both, or neither, depending on the facts. An employee can be paid the correct redundancy entitlement and still have a valid unfair dismissal claim if, for example, the employer did not genuinely need to eliminate the role, failed to consult as an applicable award or agreement required, or could have reasonably redeployed the employee elsewhere in the business but did not try. Conversely, a dismissal found to be a genuine redundancy under s 389 is excluded from the unfair dismissal jurisdiction entirely, regardless of whether the correct redundancy pay was calculated and paid. The two questions, was redundancy pay correctly calculated, and was the process and reason behind the redundancy itself fair and genuine, are separate and should not be assumed to rise or fall together.

Redundancy Pay and Notice of Termination Are Separate Entitlements

An employee whose position is made genuinely redundant is not choosing between redundancy pay and notice of termination; both are separate National Employment Standards entitlements that generally apply together. Notice of termination, covered in full on recordinglaw.com's notice of termination guide, is calculated on its own scale under s 117(3) of the Fair Work Act and must be given, or paid in lieu, in addition to any redundancy pay owed, not instead of it.

The NES Is a Floor, Not a Ceiling

Section 119 sets the legal minimum. A modern award, an enterprise agreement, or an individual employment contract can provide for a more generous redundancy scheme than the NES table, whether through a higher scale, a lower or removed small business exemption, or additional entitlements such as outplacement support. Where an award or agreement applies, it is worth checking its specific redundancy clause rather than assuming the bare NES table is the final word on the amount owed.

Using the Redundancy Pay Calculator

recordinglaw.com's Australia redundancy pay calculator applies the s 119(2) scale above to estimate a redundancy payment from a length of service and pay rate. Because the calculator applies the statutory minimum only, its output is an estimate, not a substitute for checking whether an applicable award, enterprise agreement or contract improves on that minimum, or whether the small business exemption or another exclusion under s 121 applies to the specific employer.

This article provides general legal information about the Fair Work Act 2009 (Cth) and, where noted, state and territory long service leave legislation, current as at 19 July 2026. It is not legal advice and does not account for your individual circumstances. Figures are stated for the 2026-27 financial year and are re-indexed on 1 July each year; the applicable figure for a dismissal or termination is usually the one in force on the date it took effect, not the date you read this article. For advice about a specific situation, consult a legal practitioner admitted in the relevant Australian state or territory.