When the redundancy meeting happens, most people nod through the paperwork in a daze. 📄 That is completely understandable. But before you sign anything, take the documents home, read them properly and check them against your rights. This guide explains the basics of redundancy in Australia in plain English, and suggests a few extras that are worth asking for.
Important: this is general information, not legal advice. Your entitlements depend on your award, enterprise agreement, contract and length of service. Check the Fair Work Ombudsman website or speak to a lawyer or your union for advice on your situation.
What counts as a genuine redundancy?
Broadly, a redundancy happens when your employer no longer needs your job to be done by anyone, for example because of a restructure, new technology, outsourcing or a downturn. If the employer simply replaces you with someone else in the same role, that may not be a genuine redundancy. Employers covered by an award or enterprise agreement also usually have consultation obligations before making a final decision.
Notice of termination
Under the National Employment Standards, you are entitled to a minimum period of notice (or pay instead of notice) based on your length of continuous service:
| Years of continuous service | Minimum notice |
|---|---|
| 1 year or less | 1 week |
| More than 1 year to 3 years | 2 weeks |
| More than 3 years to 5 years | 3 weeks |
| More than 5 years | 4 weeks |
If you are over 45 and have at least two years of continuous service, you get an extra week. Many employers pay notice in lieu, meaning you finish up straight away and receive the money instead.
Redundancy pay
On top of notice, eligible employees receive redundancy pay (sometimes called severance) based on years of service:
| Continuous service | Redundancy pay |
|---|---|
| At least 1 year but less than 2 | 4 weeks |
| At least 2 but less than 3 | 6 weeks |
| At least 3 but less than 4 | 7 weeks |
| At least 4 but less than 5 | 8 weeks |
| At least 5 but less than 6 | 10 weeks |
| At least 6 but less than 7 | 11 weeks |
| At least 7 but less than 8 | 13 weeks |
| At least 8 but less than 9 | 14 weeks |
| At least 9 but less than 10 | 16 weeks |
| 10 years or more | 12 weeks |
Yes, the drop at 10 years looks odd. It reflects the interaction with long service leave entitlements. Some exceptions apply: for example, small businesses with fewer than 15 employees generally do not have to pay redundancy pay, and casual employees are usually excluded. Many larger employers pay more than the minimum under their own policy or agreement, so ask for the calculation in writing.
Leave entitlements
- Annual leave: unused annual leave is paid out, and some awards include leave loading.
- Long service leave: depends on state or territory law and your length of service. In some states, pro-rata long service leave is payable on redundancy after a certain number of years.
- Personal leave: unused sick or carer’s leave is generally not paid out.
Tax on redundancy payments
Genuine redundancy payments can receive concessional tax treatment up to a limit that depends on years of service. Your payslip or termination statement should show how the payment was taxed. If something looks wrong, ask payroll or an accountant.
Extras worth asking for
Your employer does not have to provide these, but many will if asked politely:
- Outplacement or career coaching to help you find your next role
- Keeping your laptop or phone (with data wiped)
- An agreed reference and agreed wording for how your departure will be described
- Extra time to finish up, or time off to attend interviews during notice
- Continued access to employee assistance programs for a period
- Help with training or certification costs
Before you sign a deed of release
Some employers offer an extra payment in exchange for signing a deed of release, which usually means you agree not to make claims against them. Do not rush this. It is reasonable to ask for time and to get legal advice before signing.
Common mistakes
- Signing documents on the day without reading them
- Not checking the length of service used in the calculation
- Forgetting to ask for references before leaving
- Assuming the payout is final when it may be negotiable
Frequently asked questions
How much redundancy pay am I entitled to in Australia?
Under the National Employment Standards it ranges from 4 weeks for 1 to 2 years of service up to 16 weeks for 9 to 10 years. Your agreement or employer policy may provide more.
Do small businesses have to pay redundancy pay?
Businesses with fewer than 15 employees are generally exempt from paying NES redundancy pay, though notice and leave entitlements still apply.
Is redundancy pay taxed?
Genuine redundancy payments can receive concessional tax treatment up to a limit. Check your termination statement or ask an accountant.
Next, read your first 30 days after a layoff and how to use your payout wisely.
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