The exemption
Under section 121 of the Fair Work Act, an employer with fewer than 15 employees at the time of the redundancy doesn’t have to pay NES redundancy pay. The count includes all employees of the business and associated entities, including the person being made redundant, and casuals who are employed on a regular and systematic basis.
What you still get
- Notice under the NES (1 to 4 weeks, +1 if over 45 with 2+ years), or pay in lieu.
- All accrued annual leave (and leave loading if your award says so).
- Long service leave if you qualify under your state law.
- Any redundancy pay in your award, agreement or contract — some awards still require it for small businesses.
The pre-filled example
4 years at $1,400 a week, age 30, 60 hours of annual leave. In a small business: no NES redundancy pay, 3 weeks’ notice in lieu ($4,200) and leave $2,211. Take-home about $5,703.
| Small business | 15+ employees | |
|---|---|---|
| Redundancy pay | $0 | $11,200 (8 weeks) |
| Notice in lieu | $4,200 | $4,200 |
| Annual leave | $2,211 | $2,211 |
| Take-home | $5,703 | $16,903 |
Tax still helps
If a small business chooses to pay you something extra because your job no longer exists, it can still be a genuine redundancy payment — tax-free up to $13,598 + $6,801 per year of service. Pay in lieu of notice counts towards that too.
Where to get help
The Fair Work Ombudsman (13 13 94) can check your award and the headcount. If the business is insolvent, the Fair Entitlements Guarantee may cover unpaid entitlements.
Is the redundancy genuine?
Even in a small business, the employer can only make you redundant if your job no longer needs to be done by anyone. If you’re replaced soon after, or the reasons look like they’re really about performance or a complaint, you may have an unfair dismissal claim — small business employees need 12 months’ service, and claims must be lodged with the Fair Work Commission within 21 days.
Small businesses must still follow their award’s consultation clauses before a major change. And if your contract promises redundancy pay, that promise is enforceable even though the NES doesn’t require it.
Key redundancy figures (checked 5 November 2026)
| Item | 2026-27 |
|---|---|
| Tax-free base amount | $13,598 |
| Plus per completed year | $6,801 |
| ETP cap | $270,000 |
| ETP tax (under 60 / 60+) | 32% / 17% |
| NES redundancy pay | 4–16 weeks; 12 weeks from 10 years |
| Small business exemption | Fewer than 15 employees |
FAQ
Do small businesses have to pay redundancy?
Not NES redundancy pay, if they have fewer than 15 employees. Notice and accrued leave must still be paid.
Who counts towards the 15 employees?
All employees of the employer and associated entities, including the employee being made redundant and regular, systematic casuals.
What is the payout in this example?
About $5,703 after tax: 3 weeks’ notice in lieu and 60 hours of annual leave.
Sources (checked 5 November 2026): Fair Work Act 2009 s 117 (notice) and s 119–121 (redundancy pay, small business exemption); Fair Work Ombudsman redundancy pay and notice pages; ATO “Key superannuation rates and thresholds — employment termination payments” (2026-27: $13,598 + $6,801, ETP cap $270,000; 2025-26: $13,100 + $6,552, $260,000); ATO “Genuine redundancy payments” and “Unused leave on termination”.