This information is only relevant to employers and employees in the WA state industrial relations system – sole traders, unincorporated partnerships, unincorporated trusts and some incorporated or not for profit organisations. Find out more on the Guide to who is in the WA state system page.
If you operate or are employed by a Pty Ltd business – you can find information on this topic on the Fair Work Ombudsman website.
The entitlement to redundancy payments can depend upon the WA award that applies. Please check the WA award summaries or contact Wageline for information on redundancy provisions under the relevant WA award.
When an employee has been made redundant they are entitled to receive:
- the appropriate notice period or pay in lieu of notice (if the employee is not required to work the notice period);
- any unpaid wages;
- any unused accrued and pro rata annual leave;
- any unused accrued long service leave;
- pro rata long service leave (if applicable); and
- severance pay (if applicable).
Further information regarding the payout of long service leave on termination can be found on the Long service leave page.
Severance pay does not generally apply to businesses with less than 15 employees (including casual and part time employees). However, some WA awards have specific severance pay requirements that apply to all businesses, including those with less than 15 employees. The WA awards listed below do not exclude businesses with less than 15 employees from making severance payments, so if one of these awards cover the employment the award's redundancy provisions will need to be checked:
- Aboriginal Communities and Organisations Western Australian Interim Award
- Air Conditioning and Refrigeration Industry (Construction and Servicing) Award
- Artworkers Award
- Australian Workers Union Road Maintenance, Marking and Traffic Management Award
- Bakers' (Country) Award
- Bakers' (Metropolitan) Award
- Building Trades (Construction) Award
- Child Care (Out of School Care - Playleaders) Award
- Child Care (Subsidised Centres) Award
- Children's Services (Private) Award
- Crisis Assistance, Supported Housing Industry - Western Australian Interim Award
- Dental Technicians' and Attendants/ Receptionists' Award
- Earth Moving and Construction Award
- Electrical Contracting Industry Award
- Electronics Industry Award
- Engine Drivers' (Building and Steel Construction) Award
- Food Industry (Food Manufacturing or Processing) Award
- Foreman (Building Trades) Award
- Industrial Spraypainting and Sandblasting Award
- Pastrycooks' Award
- Retail Pharmacists' Award
- Social and Community Services (Western Australia) Interim Award
- Thermal Insulation Contracting Industry Award
- The Western Australian Professional Engineers (General Industries) Award
Employers are also not generally required to make severance payments to the following employees:
- employees with less than one year’s service
- probationary employees
- apprentices and trainees
- casual and contract employees
- employees terminated due to serious misconduct or for other reasons not related to redundancy.
However, some WA awards have specific severance pay provisions that do apply to one or more of the employee groups listed above. If an employer is covered by one of these awards, the employer will need to make severance payments in accordance with the award.
Severance pay entitlements
The amount of severance pay depends on how long the employee has worked for the business, as shown in the following table:
|Period of continuous service
||Minimum number of weeks pay
|Less than 1 year
|1 year and less than 2 years
|2 years and less than 3 years
|3 years and less than 4 years
|4 years and less than 5 years
|5 years and less than 6 years
|6 years and less than 7 years
|7 years and less than 8 years
|8 years and less than 9 years
|9 years and less than 10 years
|10 years and over
The table above shows the minimum severance payments, and these override any lesser amount specified in a WA award. If the WA award specifies a higher severance payment, the greater entitlement must be paid.
The calculation of redundancy pay is based on the applicable number of weeks' severance multiplied by ordinary time earnings. Ordinary time earnings excludes overtime, penalty rates, disability allowances, shift allowances, special rates, fares and travelling time allowances, bonuses, and any other ancillary payments of a like nature.
If the employee resigns during the notice period, he or she is entitled to the same severance pay they would receive if they had worked until the end of the notice period. However, in this circumstance the employee is not entitled to payment in lieu of notice.
Incapacity to pay
Employers can apply to the Western Australian Industrial Relations Commission to have the severance payment varied if they:
- do not have the capacity to pay; or
- find acceptable alternative employment for the employee.