Final pay and redundancy: frequently asked questions

Most modern awards require final pay within 7 days of the employment ending. Where no award applies, or the award is silent, payment is due on the next regular pay day. Look for the clause headed “payment on termination” in your award — it is the provision the Fair Work Ombudsman relies on, and late payment is recoverable along with any shortfall.

Yes, including while on parental leave, provided the redundancy is genuine and the employer meets its consultation obligations under the award. Leave being taken at the time is paid out as usual. Employees on parental leave have an additional protection: the employer must consider redeployment, and dismissing someone because they took leave is adverse action, not redundancy.

If the employer finds you acceptable alternative employment — with comparable pay, hours, location and status — it can apply to the Fair Work Commission to reduce or remove the redundancy pay. The Commission decides whether the alternative really is acceptable. Refusing a reasonable offer can also affect the amount, so put your reasons for refusing in writing at the time.

Yes, provided it is a genuine redundancy — that is, the position is abolished and nobody else is engaged to do the work. Volunteering for it does not change the tax treatment: the tax-free base and per-year amounts apply exactly as they would on a compulsory redundancy. Early retirement schemes approved in advance by the ATO attract the same tax-free limit.

A redundancy payout does not stop you claiming JobSeeker, but it delays it. Centrelink applies an income maintenance period: the payout is treated as income for the number of weeks it represents, and payments begin only once that period ends. Claim straight away anyway, because the waiting period runs from the date of claim, not from the date the money is spent.

Partly. Superannuation is payable on outstanding wages and, under most awards, on annual leave loading. It is not payable on genuine redundancy pay, on payment in lieu of notice, or on unused annual and long service leave paid out at termination, because none of these are ordinary time earnings. Check your agreement, which may be more generous than the statutory minimum.

Being over 45 earns you one extra week of notice, provided you have at least 2 years of continuous service — that is the only age-based entitlement in the National Employment Standards. Redundancy pay itself does not vary with age. Tax does change, but at 60 rather than 45: the ETP rate above the tax-free limit drops from 32% to 17% once you reach preservation age.

A government scheme that pays unpaid wages, annual leave, long service leave, notice and up to four weeks of redundancy pay per year of service when an employer becomes insolvent and cannot pay. Claims are lodged with the Department of Employment within 12 months.

If the same work continues under a contract, the redundancy is unlikely to be genuine, and the consequence is expensive: the tax-free limit is lost and the whole payment becomes an employment termination payment. The Fair Work Commission treats such arrangements as sham contracting and may deal with them as unfair dismissals. The ATO can also reassess the tax treatment years later.

Six years from the date the amount fell due — a long window, and worth using. Claims run through the Fair Work Ombudsman, which can investigate and recover, or through the small claims division of the Federal Circuit and Family Court for amounts up to $100,000. Long service leave is different: it is state law, so the claim goes to the state industrial body instead.

Employer contributions stop when the employment ends, and no super is payable on the redundancy itself. There is an opportunity, though: you can pay part of the net payout into super as a personal deductible contribution, within the concessional cap and any available carry-forward amounts. Because the ETP inflates your taxable income for the year, the deduction can offset a meaningful part of the tax.

No. The calculator applies the National Employment Standards, the long service leave rules of each state and the ATO thresholds, but it cannot see your award, your enterprise agreement or your individual contract — any of which may be more generous than the statutory minimum. Use it to sense-check the payslip and to frame the questions you put to your employer or to the Fair Work Ombudsman.