Genuine redundancy payment

(Enthusiast)Enthusiast

26 July 2025

A business is closing up and will no longer be operating. Is the employees final pay a genuine redundancy payment?

According to the ATO - A genuine redundancy payment is a payment made to you as an employee if your job is abolished and you no longer have a job. This means your employer has made a decision that your job no longer exists, and your employment is to be terminated.

I am just wondering if this applies to those jobs where a business is closing down, rather than an individuals job no longer exists.

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PayrollDeanne

(Taxicorn)Taxicorn

26 July 2025

Hiya @SamMeggs 👋

This is actually a question for the Fair Work Ombudsman, who is the regulator for employment matters 😉

You can see from that hyperlink, what entitlements must be paid to employees depends on a range of factors.

Deanne

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SamMeggs

(Enthusiast)Enthusiast

28 July 2025

Thank you so much, I'll check it out

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SamMeggs

(Enthusiast)Enthusiast

10 Aug 2025

Hi again

The FWO website clarifies that closure of a business is reason for a genuine redundancy.

Scenario is :-

Small business employer
Two directors as dual capacity employees (aged 60 and 62)
Closure of the business due to ill health of one of the directors - 6 years post kidney transplant and wishes to close up business and focus on family life etc.

Do the following payments form part of a genuine redundancy payment for all employees (incl the two directors) and therefore subject to the tax free concession (up to the current limits) with the amount over the tax free limit taxed at concessional ETP rates….

SEVERANCE PAY (NOT MANDATORY AS SMALL BUSINESS EMPLOYER)

GRATUITY PAYMENT

TRANSFER OF PROPERTY AT MARKET VALUE

Thanks and kind regards

Sam

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PayrollDeanne

(Taxicorn)Taxicorn

11 Aug 2025

Yes, as per the ATO guidance and TR 2009/2 😉 Deanne

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