Notice, redundancy and unfair dismissal in Australia for employers based overseas

An Australian employee gets between one and four weeks’ notice under the National Employment Standards (NES), with one more week if they are over 45 and have at least two years’ continuous service. The scale is set by section 117 of the Fair Work Act 2009 and summarised in the Fair Work Ombudsman’s fact sheet on notice and redundancy pay.

• Continuous service of one year or less: one week
• Service past one year, to three years: two weeks
• Service past three years, to five years: three weeks
• Service beyond five years: four weeks
• Aged over 45 with two or more years’ service: one extra week

The employer may pay the notice period instead of having the employee work it. For an employee on a fixed salary, a week of payment in lieu is one fifty-second of the annual salary; where allowances or penalty rates are regular, check how the award treats them before calculating the figure.

The NES scale is a minimum. A modern award, an enterprise agreement or the employment contract may give a longer period, and the notice an employee must give when resigning usually comes from the award or contract rather than the NES. Check the applicable instrument before relying on the statutory figure alone.

An example shows how the pieces combine. A 50-year-old employee with six years of continuous service is owed four weeks under the service scale and one more week for age, so five weeks in total. The same person at 44 would be owed four weeks.

Redundancy pay under the NES is a number of weeks’ base pay fixed by the employee’s length of continuous service, and it applies when the job is no longer needed. It rises from nil for less than a year to 16 weeks at nine to ten years, then drops to 12 weeks at ten years or more.

• Under 1 year: nil
• 1 to under 2 years: 4 weeks
• 2 to under 3 years: 6 weeks
• 3 to under 4 years: 7 weeks
• 4 to under 5 years: 8 weeks
• 5 to under 6 years: 10 weeks
• 6 to under 7 years: 11 weeks
• 7 to under 8 years: 13 weeks
• 8 to under 9 years: 14 weeks
• 9 to under 10 years: 16 weeks
• 10 years or more: 12 weeks

An employer with a headcount below 15 counts as a small business and owes no NES redundancy pay. The headcount that matters is the legal employer’s, which is why the answer can depend on who employs the person.

A worked case shows the scale in use. An employee on AUD 110,000 a year has a weekly base rate of about AUD 2,115.38. After four years and three months of service they fall in the 4 to under 5 years band, so the NES redundancy entitlement is 8 weeks, or about AUD 16,923.08, in addition to notice.

Notice and redundancy pay are separate entitlements, so both are paid when a role is made redundant. With four years and three months of service, the same employee is owed three weeks’ notice, or four if over 45. Three weeks’ notice paid in lieu plus eight weeks’ redundancy pay comes to 11 weeks, about AUD 23,269.23 before tax, not counting leave balances.

Payments for a genuine redundancy escape tax up to a ceiling that rises with service. The 2026-27 ceiling set by the ATO is AUD 13,598, with AUD 6,801 added per completed year, up from AUD 13,100 plus AUD 6,552 in 2025-26.

In the worked case above, four completed years give a tax-free limit of AUD 13,598 plus four times AUD 6,801, which is AUD 40,802. The NES redundancy amount of about AUD 16,923.08 sits well within it, so it would be tax-free if the redundancy is genuine within the ATO’s meaning.

Amounts above the tax-free limit form part of an employment termination payment (ETP). The ETP cap for 2026-27 is AUD 270,000, according to the ATO’s termination payment thresholds. Notice paid in lieu and unused leave follow their own tax treatment, and the payroll must report each component correctly through Single Touch Payroll.

A company redundancy policy that pays more than the NES minimum changes the arithmetic, since the extra amount counts toward the same tax-free limit. The payroll provider should split the final pay into its categories, such as wages, notice, redundancy and leave, before it is processed.

Access to the Fair Work Commission’s unfair dismissal jurisdiction depends on pay and coverage: an employee qualifies if their earnings sit under the high income threshold, or an award or enterprise agreement applies to them, and they have completed the minimum employment period. Since 1 July 2026 that threshold has stood at AUD 190,100; the 2025-26 figure was AUD 183,100.

The minimum employment period is widely cited as 6 months, extended to 12 months for small business employers (under 15 staff). The figures are well established in practice, but confirm them against the current text on the Fair Work Commission’s site before relying on them for a particular dismissal date. Many employers treat that period as an informal probation benchmark.

Award coverage matters here in a way that surprises some overseas employers. An employee earning above AUD 190,100 who is still covered by an award or enterprise agreement keeps access to the unfair dismissal regime. Only high earners outside any award or agreement fall outside it. Our article on the AUD 190,100 high income threshold looks at the other rights tied to the same figure.

Two further points are commonly described but should be checked for the specific case. Small business employers can follow the Small Business Fair Dismissal Code, and a dismissal that is a genuine redundancy is generally outside the unfair dismissal jurisdiction. Both depend on the facts and on the current statutory wording.

Any claim is brought against the legal employer. Where an employer of record employs the person, the EOR is the respondent, and the client that directed the work supplies the evidence about performance, conduct or the business reasons for the decision.

Compensation orders are limited to whichever is lower: half the high income threshold, or the pay the employee would have earned over 26 weeks. Half the threshold comes to AUD 95,050 where the dismissal takes effect on or after 1 July 2026 (the previous year’s figure was AUD 91,550). The Fair Work Commission explains the formula on its compensation cap page.

For the employee on AUD 110,000, 26 weeks’ pay is AUD 55,000, which is lower than AUD 95,050, so AUD 55,000 would be the most the Commission could order in compensation. For someone earning close to the threshold the half-threshold figure becomes the binding limit instead.

Time limits are short. An unfair dismissal application is generally understood to be due within 21 days after the dismissal takes effect, and general protections claims are reported to follow a similar window. Check the current time limit on the Fair Work Commission’s site, because a late application needs an extension. Either way, an employer should keep its reasons, warnings and meeting notes ready from the day of the dismissal.

Legal advice and management time spent on a claim add to the bill whatever the outcome. Where an employer of record is the legal employer, agree in advance who approves any offer to resolve a claim and how the cost is shared, so no one waits on a decision while the Commission’s timetable runs.

The cost of defending a claim sits on top of any compensation. Keeping that risk low is mostly a matter of process: state the reason in writing, let the employee reply to it before anything is final, and allow them to bring a support person to meetings.

If the role sits with Employer of Record Australia, we hold the contract as legal employer, give notice, pay out the final salary and respond to any Fair Work Commission claim. Your company decides whether the role ends and supplies the business reasons and performance history.

The sequence usually follows five steps. You raise the decision with us early, we check service length, award coverage and the notice and redundancy figures, a meeting is held with the employee, written notice goes out, and the final pay is processed. Final pay includes wages to the last day, any payment in lieu of notice, redundancy pay where it applies, and leave balances as required by the award, agreement or legislation; confirm the treatment of unused annual leave in each case.

Superannuation is due on the final pay too. Under Payday Super, super on the last pay’s qualifying earnings has the usual 7 business day deadline, and the payment is reported through Single Touch Payroll like any other pay.

Overseas employers used to at-will termination should allow more time than they expect. Our comparison of at-will vs Fair Work dismissal explains the practical gap, and the Australian employment contract checklist shows which notice and termination terms to agree at the start.

Fixed-term contracts need separate attention. Rules in force from 6 December 2023 generally cap a fixed-term arrangement at two years in total, renewals included, and at two back-to-back contracts covering similar work, with some exceptions. Disputes about those limits go to the Fair Work Commission.

Post-employment restraints are also changing. The government released an exposure draft bill on 7 September 2026 that would stop employers using non-compete clauses with workers paid under the high income threshold, with consultation closing on 2 October 2026. It is a draft only and is not law, so existing restraint clauses continue to be assessed under the current law, which generally asks whether the restraint is reasonable to protect a legitimate interest.

Q01Can notice be paid out instead of worked in Australia?+

A.Yes. The National Employment Standards allow the employer to pay the notice period in lieu instead of requiring the employee to work it.

Q02Does a company with under 15 employees pay redundancy pay?+

A.Not under the National Employment Standards. Employers below 15 employees count as small businesses and owe no redundancy pay under the NES; an award, agreement or contract can still require it.

Q03What is the unfair dismissal compensation cap for 2026-27?+

A.For dismissals from 1 July 2026 the cap is whichever is lower of AUD 95,050 and 26 weeks’ pay, which is half the AUD 190,100 high income threshold.

Q04Is an employee earning above AUD 190,100 always outside unfair dismissal?+

A.No. The threshold matters only for staff outside every award and enterprise agreement. Someone covered by either keeps access whatever they earn.

Q05How much of a redundancy payment is tax-free in 2026-27?+

A.The 2026-27 tax-free portion of a genuine redundancy payment is AUD 13,598 and a further AUD 6,801 per completed year; any excess forms part of an employment termination payment.