Redundancy notice and pay in lieu of notice

By Stefan Savva, Founder · Checked against the Fair Work Ombudsman and the Fair Work Commission on 28 October 2026 · 6 min read

When you make someone redundant you owe two separate things: notice of termination, from 1 to 4 weeks plus a week for some older workers, and redundancy pay, from 4 to 16 weeks depending on service. You can pay the notice period instead of having the person work it, but at their full rate of pay, not their base rate.

This guide sets out both minimums under the National Employment Standards in two tables, explains how pay in lieu of notice is worked out, and lists who is not covered. Every figure comes from the Fair Work Ombudsman's notice and redundancy pay fact sheet. It is general information, not legal advice. An award, enterprise agreement or contract can give more than these minimums, and where it does, the higher amount applies.

Notice of termination

Notice is based on the person's continuous service with you when you give it.

Minimum notice
Continuous service	Minimum notice
1 year or less	1 week
More than 1 year to 3 years	2 weeks
More than 3 years to 5 years	3 weeks
More than 5 years	4 weeks

Add one week for an employee who is over 45 and has at least 2 years of continuous service when you give notice. So a 50 year old with 8 years of service is owed 5 weeks' notice.

Notice must be given in writing and must state the day employment ends. It can be handed over, left at or posted to the person's last known address, or sent by email or text if the person agrees.

Pay in lieu of notice

You can end employment straight away and pay the notice period instead. The payment must be at the person's full rate of pay for the hours they would have worked during the notice period. The full rate includes:

incentive-based payments and bonuses
loadings
monetary allowances
overtime and penalty rates
any other separately identifiable amounts

That is the difference people miss. A shift worker who usually earns penalty rates is paid those penalty rates in lieu of notice, even though they will not work the shifts.

You can also mix the two: have the person work part of the notice period and pay the rest. Whatever you choose, put it in the letter. Our redundancy letter templates include both wordings.

Redundancy pay

Redundancy pay is separate from notice and is paid on top of it. It is paid at the person's base rate of pay for ordinary hours, which does not include bonuses, loadings, allowances, overtime or penalty rates.

Redundancy pay (National Employment Standards)
Continuous service	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

The drop from 16 weeks to 12 weeks at 10 years is not a mistake. The fact sheet says it is consistent with the 2004 Redundancy Case decision of the Australian Industrial Relations Commission.

To estimate both amounts for one person, try our redundancy payout calculator.

Who is not covered

Notice under the National Employment Standards does not apply to:

casual employees
employees engaged for a set period or season
employees dismissed for serious misconduct
trainees engaged for a set training term (apprentices are covered)
some daily hire employees in building and construction and livestock slaughter, and some weekly hire employees in the meat industry

Redundancy pay does not apply to:

employees with less than 12 months of continuous service
most casual employees
employees engaged for a set period or season
employees dismissed for serious misconduct
apprentices and some trainees
employees of most small business employers, those with fewer than 15 employees when notice is given

An award or agreement can change these exclusions. Our guide to redundancy in a small business explains how to count your employees.

Reducing redundancy pay

Under section 120 of the Fair Work Act 2009, you can apply to the Fair Work Commission to reduce the redundancy pay you owe if you have found the person other acceptable employment, or if you cannot pay the full amount. The Commission decides; you cannot reduce it yourself.

What else goes in the final pay

Notice and redundancy pay are two of the items in the final pay. The others are outstanding wages, unused annual leave and leave loading where it applies, and long service leave where it applies. Sick and carer's leave is not paid out (Fair Work Ombudsman).

Common questions

How much notice is required for a redundancy in Australia?

Minimum notice under the National Employment Standards is 1 week for 1 year of service or less, rising to 4 weeks for more than 5 years, plus 1 week for an employee over 45 with at least 2 years of service.

Is pay in lieu of notice paid at the base rate?

Pay in lieu of notice is paid at the full rate of pay, including bonuses, loadings, allowances, overtime and penalty rates the person would have earned. Redundancy pay, by contrast, is paid at the base rate for ordinary hours.

Why is redundancy pay lower after 10 years of service?

Redundancy pay peaks at 16 weeks for 9 to 10 years of service and falls to 12 weeks from 10 years. The Fair Work Ombudsman's fact sheet says the drop is consistent with the 2004 Redundancy Case decision.

Can an employer reduce redundancy pay?

An employer can apply to the Fair Work Commission to reduce redundancy pay when it has found the person other acceptable employment or cannot pay the full amount. The Commission makes that decision.