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WHAT IS REDUNDANCY PAYMENT? WHAT PAYMENTS ARE INCLUDED AND WHAT ARE NOT INCLUDED IN A REDUNDANCY PAYMENT?

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24
May

If employment is terminated by the employer because the employer no longer requires the job to be performed, the employee will get a termination payment or redundancy payment under the industrial agreement or employment contract.

The redundancy payment includes:

  • Pay in lieu of notice (if the employee is not required to work the notice period);
  • Severance payment;
  • Golden handshake. Things that are excluded from redundancy payment are: 
  • Unpaid wages or unused accrued annual leave;
  • Payments made in lieu of superannuation benefits;
  • Unused long service leave paid on termination. Employees who are excluded from redundancy payment: 
  • Casual employee;
  • Employees with employment of less than 12 months;
  • Employee that are terminated due to serious misconduct; 
  • Employee is an apprentice.

If the payments meet the conditions of redundancy, your redundancy payments are exempt
from tax up to a certain limit when you do your tax return online. For 2017, online tax return the tax free base amount and additional amount per completed year of service are $9,936 and $4,969 respectively.


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