Termination and Redundancy in Australia - What Overseas Employers Need to Know

By Jasmin Robertson

Ending someone’s employment in Australia is not as simple as giving notice and processing a final pay. There are minimum entitlements, specific calculations, unfair dismissal rules and a 21-day window in which a terminated employee can lodge a claim. Getting any of it wrong creates real exposure under the Fair Work Act.

This is the area where we see overseas employers make the most expensive mistakes. Here’s what you need to understand before you’re in that situation.

Notice periods - the minimums

Under the NES, employers must provide written notice of termination based on the employee’s length of continuous service. The minimums are:

• Less than 1 year of service: 1 week

• 1 to 3 years: 2 weeks

• 3 to 5 years: 3 weeks

• More than 5 years: 4 weeks

Employees aged 45 or over with at least 2 years of continuous service are entitled to an additional week on top of the applicable period, bringing the maximum statutory notice to 5 weeks.

Notice can be worked out or paid in lieu. Most employment contracts for professional roles include longer notice periods than the NES minimums - 4 weeks or a month is common regardless of tenure. Whatever the contract says, it cannot be less than the NES minimum. It can always be more.

One thing that surprises overseas employers: the notice scale is capped. An employee with 6 years of service and an employee with 20 years both receive 4 weeks notice under the NES. Longer tenure does not keep increasing the notice period unless the contract, award or enterprise agreement specifically provides for it.

Redundancy pay - separate from and in addition to notice

If a role is made genuinely redundant, eligible employees are entitled to redundancy pay on top of their notice entitlement. Both apply. Notice pay and redundancy pay are not interchangeable.

Redundancy pay scales from 4 weeks for employees with 1 to 2 years of service up to a maximum of 16 weeks for those with 9 to 10 years. After that it actually drops back to 12 weeks for employees with 10 or more years of service. That’s not a typo - the NES does this deliberately because long-tenured employees access long service leave separately. It catches people out every time.

To put that in real terms: a 6-year employee leaving in a redundancy situation is entitled to 11 weeks redundancy pay plus 4 weeks notice, plus all accrued leave on top of that. It adds up quickly.

Employees need at least 12 months of continuous service to be eligible for redundancy pay. Casual employees are not entitled to it. Small businesses with fewer than 15 employees are generally exempt from redundancy pay obligations, though notice periods still apply.

What makes a redundancy genuine?

A genuine redundancy requires that the job no longer needs to be done by anyone. If the role is replaced by another person doing the same work shortly after, it is not a genuine redundancy - it is a dismissal, and the employee can bring an unfair dismissal claim.

Overseas employers sometimes assume that restructuring a team from offshore, or replacing a local role with an offshore equivalent, automatically qualifies as a genuine redundancy. It may, but it requires careful handling. The Fair Work Act also requires that where a Modern Award or enterprise agreement applies, the employer must consult with the affected employee before the decision is finalised - not after.

Unfair dismissal

Employees who have been employed for at least 6 months, or 12 months in a small business, can lodge an unfair dismissal claim with the Fair Work Commission within 21 days of their dismissal taking effect. The compensation cap for unfair dismissal is currently indexed at AUD $91,550.

Unfair dismissal claims are not just about whether there was a valid reason for termination. They also look at whether the process was fair - whether the employee was given an opportunity to respond to concerns, whether warnings were given, whether the decision was proportionate. Overseas businesses that follow HR practices from their home country without understanding Australian procedural requirements are particularly exposed here.

What goes into a final pay

Final pay in Australia is not just outstanding wages. It must include:

• Wages owed up to the last day of employment

• Payment in lieu of notice if notice is not worked out

• Accrued but untaken annual leave paid out at the ordinary rate

• Redundancy pay if applicable

• Leave loading on the annual leave payout if the employee’s award or agreement includes it

  
  

Since 1 January 2025, deliberate underpayment of employee entitlements is a criminal offence under Australia’s Closing Loopholes legislation. The days of treating underpayment as a payroll error to be corrected quietly are over.

Final pay is typically due within 7 days of the last day of employment, though the exact timeframe can depend on the applicable award or agreement.

How Employer of Record Australia handles terminations

As the legal employer, Employer of Record Australia manages the termination process end to end. We calculate notice and redundancy correctly based on the employee’s tenure and applicable entitlements, prepare the termination documentation, process the final pay including all leave payouts, and manage the timeline and communication to reduce the risk of claims.

For overseas businesses, having the legal employer handle this directly means the process is managed by someone who knows Australian law, not by a head office in another country navigating it for the first time under pressure.

TL;DR

Termination in Australia involves minimum notice periods based on tenure, redundancy pay on top of notice for genuine redundancies, and a 21-day window in which employees can lodge unfair dismissal claims. Final pay must include all accrued entitlements. Getting the process wrong - on the numbers or the procedure - creates significant legal and financial exposure.

As the legal employer, Employer of Record Australia manages every termination correctly so our clients don’t have to navigate Australian employment law in a high-pressure situation from the other side of the world.

If you’d like to talk through what that looks like for your business specifically, reach out!

Jasmin Robertson is Operations Manager at Employer of Record Australia, a Brisbane-based EOR, sponsorship and recruitment business helping global companies hire in Australia.