Being made redundant is stressful, but understanding exactly what you're legally entitled to can make a significant financial difference. Many Australians accept their redundancy payout without checking whether it's correct — and some leave thousands of dollars on the table as a result. This guide covers the National Employment Standards redundancy scale, notice entitlements, leave payouts, tax treatment, and what to do if you think your redundancy was not genuine.
What Is a Genuine Redundancy?
Under the Fair Work Act 2009, a genuine redundancy occurs when your employer no longer requires your job to be performed by anyone (due to operational changes, restructuring, or economic reasons), and your employer has complied with any consultation obligations in your enterprise agreement or modern award. If these conditions are not met, your termination may be an unfair dismissal rather than a genuine redundancy — a critical distinction, because unfair dismissal entitles you to reinstatement or compensation, not just a redundancy payment.
A redundancy is not genuine if your employer hires someone else to do the same job shortly afterwards, or if your employer could have reasonably redeployed you to another suitable role within the organisation. Use our Redundancy Payout Calculator to estimate your entitlements quickly.
NES Redundancy Pay Scale
The National Employment Standards (NES) set the minimum redundancy pay entitlements based on your period of continuous service. These apply to all national system employees (most employees in Australia):
| Years of Continuous Service | Minimum Redundancy Pay (Weeks of Base Pay) |
|---|---|
| 1 year to less than 2 years | 4 weeks |
| 2 years to less than 3 years | 6 weeks |
| 3 years to less than 4 years | 7 weeks |
| 4 years to less than 5 years | 8 weeks |
| 5 years to less than 6 years | 10 weeks |
| 6 years to less than 7 years | 11 weeks |
| 7 years to less than 8 years | 13 weeks |
| 8 years to less than 9 years | 14 weeks |
| 9 years to less than 10 years | 16 weeks |
| 10 years or more | 12 weeks* |
*The entitlement reduces to 12 weeks at 10+ years because long-serving employees are more likely to be covered by enterprise agreements with higher rates, and some long-service leave provisions interact with these calculations.
Notice Pay Entitlements
In addition to redundancy pay, you're entitled to notice (or payment in lieu of notice) based on your length of service. Under the NES:
- Less than 1 year: 1 week notice
- 1–3 years: 2 weeks notice
- 3–5 years: 3 weeks notice
- 5 years or more: 4 weeks notice
- If you're over 45 and have worked for the employer for at least 2 years, add 1 additional week
Your employer can ask you to work out your notice period, or pay you out instead. Payment in lieu of notice is taxed as ordinary income.
Tax-Free Redundancy Amounts (2025–26)
The ATO provides a tax-free threshold for genuine redundancy payments. The tax-free portion is based on your years of service and is indexed annually:
| Component | 2025–26 Amount | Notes |
|---|---|---|
| Base tax-free amount | $12,524 | Applies regardless of years of service |
| Per year of service (additional) | $6,264 | Multiplied by completed years of service |
| Example: 5 years service | $12,524 + (5 × $6,264) = $43,844 | Tax-free up to this amount |
| Example: 10 years service | $12,524 + (10 × $6,264) = $75,164 | Tax-free up to this amount |
The amount above the tax-free threshold is taxed as an "employment termination payment" (ETP) at a maximum rate of 32% (including Medicare) up to a cap, and at your marginal rate above the ETP cap. This is almost always lower than your normal income tax rate, making redundancy payments relatively tax-advantaged.
Annual Leave and Long Service Leave Payout
On top of redundancy pay, you're entitled to be paid out all accrued but untaken annual leave at your regular rate of pay (plus leave loading if applicable, typically 17.5%). Accrued long service leave entitlements also become payable. These amounts are taxed as ordinary income, not under the favourable ETP rules.
What to Do If You're Made Redundant: A Checklist
- Request a written statement of your entitlements, broken down by category (redundancy pay, notice, annual leave, LSL)
- Verify your completed years of service — start date matters, and some employers incorrectly calculate casual service periods
- Check whether a more generous redundancy scale applies under your enterprise agreement or contract
- Ask your employer whether redeployment options were considered — if not, the redundancy may not be genuine
- Lodge an unfair dismissal or general protections claim within 21 days if you believe the process was improper
- Contact Centrelink — income support may be available after any "waiting period" based on your redundancy payout amount
- Consider salary sacrifice or superannuation contributions with part of your payout to reduce your tax liability
Small Business Redundancy Exemption
Employees of small businesses (fewer than 15 employees) are not entitled to NES redundancy pay. They are still entitled to notice pay and accrued leave payouts. If your employer is a small business, the unfair dismissal provisions are also less protective. However, enterprise agreements and individual contracts may still provide redundancy entitlements above the statutory minimum — always check your specific documents.