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March 17, 2021

Question from Jason Rogers ([email protected])

Hi. How do you calculate NES redundancy pay when making a payment in lieu of notice? ie. if the employee’s anniversary date would have fallen in the notice period, but they do not reach it because the notice is paid in lieu, do you base their redundancy pay on the their last day of employment, or on what their last day of employment would have been if they had worked out their notice (rather than notice being paid in lieu)

Hi Jason

My apologies for the delay getting back to you.

Under the Fair Work Act 2009, redundancy entitlement depends on the employee’s period of continuous service.  An employee’s period of service ends on the date of termination, therefore the redundancy entitlement should be calculated by reference to the actual date of termination.

However, employers should be wary of paying an employee in lieu of notice if this is done for the purpose of avoiding redundancy payment obligations. You may wish to consider raising the situation with the employee to avoid a future dispute.

Kind regards

Ella Clements

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