Redundancy Pay: 4-16 Weeks Owed

Under the National Employment Standards (NES), if your position is made redundant, you're entitled to a redundancy payment based on your continuous years of service with your employer. The scale is: 1-2 years = 4 weeks, 2-3 years = 6 weeks, 3-4 years = 7 weeks, 4-5 years = 8 weeks, 5-6 years = 10 weeks, 6-7 years = 11 weeks, 7-8 years = 13 weeks, 8-9 years = 14 weeks, and 9-10 years = 16 weeks. After 10 years of service, the entitlement drops back to 12 weeks.

Employees with less than 12 months of continuous service aren't entitled to NES redundancy pay. These are minimum entitlements — your award, enterprise agreement, or contract may provide more generous terms.

If your employer is a small business (fewer than 15 employees at the time of termination), they are exempt from paying NES redundancy pay. This is one of the most important exceptions to understand. The employee count includes all employees of the business, including casual employees who're employed on a regular and systematic basis.

It also includes employees of associated entities (related companies). However, a small business employer may still be required to pay redundancy under an applicable Modern Award or enterprise agreement, even if the NES exemption applies.

If your employer recently grew past 15 employees, only your service from the date the business exceeded 15 employees counts toward the redundancy calculation.

Continuous service means the period of unbroken employment with the same employer. It includes periods of paid leave (annual leave, personal leave, long service leave), unpaid leave authorised by the employer, unpaid parental leave (up to the first 12 months), and time stood down. It doesn't include unauthorised absences or unpaid leave that's not authorised.

If your employer's business was sold or transferred and you moved to the new employer, your service with the previous employer typically counts as continuous service with the new owner under the transfer of business provisions in the Fair Work Act. Breaks caused by genuine redundancy followed by re-employment with the same employer may restart the clock.

A genuine redundancy occurs when the employer no longer requires anyone to perform your job, the employer has complied with consultation requirements in any applicable award or agreement, and it would not have been reasonable to redeploy you within the business or an associated entity. If your redundancy meets these criteria, part of your payout is tax-free. For 2025-26, the tax-free limit is a base amount of $12,524 plus $6,264 for each completed year of service.

For example, with 5 completed years of service, the tax-free portion is $12,524 + (5 x $6,264) = $43,844. Amounts above this threshold are taxed at your marginal rate (with a possible concessional rate if they're within certain caps).

This tax-free treatment doesn't apply if you're over preservation age.

Redundancy pay isn't the only payment you are entitled to when made redundant. You should also receive: payment for your minimum notice period (or payment in lieu of notice if you are asked to leave immediately), payment for all accrued but untaken annual leave (including leave loading if applicable under your award), accrued long service leave (if eligible under your state or territory legislation), any outstanding wages for hours already worked, and any other entitlements owed under your award or enterprise agreement such as rostered days off. Your employer must pay all final amounts within 7 days of termination, or on the next regular pay day, whichever is sooner.

Request an itemised final pay slip to verify everything is correct.

If you believe your redundancy wasn't genuine — for example, if your role was actually filled by someone else, or the employer didn't follow proper consultation procedures — you may be able to make an unfair dismissal claim with the Fair Work Commission. You've 21 days from the date of termination to lodge an application. A redundancy isn't genuine if the employer could have reasonably redeployed you to another position within the business or an associated entity.

Additionally, if the employer didn't comply with the consultation obligations in your Modern Award or enterprise agreement before making you redundant, it may fail the genuine redundancy test. This doesn't automatically mean you win an unfair dismissal claim, but it removes the genuine redundancy defence.

To calculate your redundancy payment, multiply your number of weeks' entitlement (from the NES scale above) by your base weekly pay rate. Your base rate of pay is your ordinary hourly rate multiplied by your standard hours (usually 38 for full-time). It does not include overtime, penalty rates, allowances, or bonuses.

For example, if you earn $30 per hour, your base weekly pay is $30 x 38 = $1,140. With 6 years of service, you're entitled to 11 weeks, so your redundancy pay is $1,140 x 11 = $12,540.

Part-time employees calculate on their part-time hours. Use our Redundancy Pay Calculator to get a precise figure based on your specific situation, including an estimate of the tax-free component.

Here are worked examples to help you estimate your redundancy payout at common salary levels. At $55,000 per year ($28.95/hr, $1,100 base weekly pay): 2 years of service = 4 weeks = $4,400; 5 years = 10 weeks = $11,000; 8 years = 14 weeks = $15,400; 10+ years = 12 weeks = $13,200. At $75,000 per year ($39.47/hr, $1,500 weekly): 2 years = $6,000; 5 years = $15,000; 8 years = $21,000; 10+ years = $18,000.

At $95,000 per year ($50.00/hr, $1,900 weekly): 2 years = $7,600; 5 years = $19,000; 8 years = $26,600; 10+ years = $22,800. At $120,000 per year ($63.16/hr, $2,400 weekly): 2 years = $9,600; 5 years = $24,000; 8 years = $33,600; 10+ years = $28,800.

Remember, these are minimum NES entitlements calculated on the base rate only — your award, enterprise agreement, or contract may provide for higher amounts. Also note the unusual feature of the NES scale: entitlements peak at 16 weeks for 9-10 years of service, then drop to 12 weeks for 10+ years. This is because the legislation assumes that employees with 10+ years of service will typically also have access to long service leave, which provides a separate financial buffer. Part-time employees receive the same number of weeks but at their lower weekly base pay — for example, a part-time worker on 25 hours per week at $30/hr has a base weekly pay of $750, so 8 years of service yields $750 x 14 = $10,500.

For the NES provides the minimum floor for redundancy pay, but many workers are entitled to significantly more under their modern award, enterprise agreement, or employment contract. Some examples of above-NES redundancy provisions include the following. The Manufacturing and Associated Industries Award provides for additional severance payments for employees made redundant after being directed to train their replacement.

Quick version: Many enterprise agreements in the mining, construction, and resources sectors include enhanced redundancy pay — sometimes as high as 4 weeks per year of service with no cap, compared to the NES maximum of 16 weeks. Senior executive contracts frequently include generous severance clauses, sometimes calculated as 3-6 months' total remuneration (including bonuses and super) rather than just base pay.

Some agreements also include job search entitlements — paid time off during the notice period to attend interviews. In the public sector, both Commonwealth and state enterprise agreements typically provide more generous redundancy packages than the NES, often including 2-3 weeks per year of service with higher caps. If you're being made redundant, do not assume the NES scale is all you are entitled to. Check your employment contract first, then your enterprise agreement (if applicable), then your modern award.

The most beneficial provision applies. If you're unsure which instrument covers you, contact the Fair Work Ombudsman or your union (check your payslip).

The tax treatment of redundancy payments can make a significant difference to your net payout, and it's worth understanding the rules to ensure you aren't overtaxed. For a genuine redundancy (one where the employer no longer needs anyone to do your job and has followed proper consultation), a portion of your payment is completely tax-free. For 2025-26, the tax-free limit is $12,524 plus $6,264 for each completed year of service.

With 3 completed years: $12,524 + (3 x $6,264) = $31,316 tax-free. With 7 completed years: $12,524 + (7 x $6,264) = $56,372 tax-free.

With 10 completed years: $12,524 + (10 x $6,264) = $75,164 tax-free. Any amount above the tax-free limit is taxed concessionally — the first $235,000 above the tax-free portion (called the ETP cap) is taxed at a maximum of 17% (including Medicare levy) if you are below preservation age, or 32% if you are at or above preservation age. Amounts exceeding the ETP cap are taxed at the top marginal rate of 47%. Crucially, the tax-free treatment only applies to genuine redundancies.

If the ATO determines your redundancy was not genuine — for example, if someone was hired to replace you — the entire payment is taxed as an employment termination payment with no tax-free portion. Your employer should issue an income tax withholding statement showing the tax-free and taxable components.

If you believe they have applied the wrong treatment, contact the ATO or a tax agent. Also note that accrued annual leave and long service leave paid out on termination are taxed separately under different rules and are not included in the redundancy tax-free calculation.

Being made redundant can be stressful and confusing. Here is a step-by-step action guide to protect your entitlements. Step 1: Ask for the redundancy in writing.

The short answer? Request a formal letter from your employer confirming the redundancy, including your last day, notice period arrangements, and a breakdown of all payments you will receive. Step 2: Verify the redundancy is genuine.

A genuine redundancy means the employer no longer needs anyone to do your job, they have consulted with you as required by your award or agreement, and they could not reasonably redeploy you. If any of these elements are missing, the redundancy may not be genuine. Step 3: Calculate your entitlements. Add up your redundancy pay (NES or better), notice period pay (or payment in lieu), accrued annual leave and leave loading, accrued long service leave (if eligible), and any outstanding wages or allowances.

Step 4: Check the tax treatment. Work out your tax-free amount using the formula above and compare it to your employer's calculations.

Step 5: Request an itemised final pay breakdown before your last day so you can query any discrepancies. Step 6: Consider your options if the redundancy seems unfair. You've 21 days from termination to lodge an unfair dismissal application with the Fair Work Commission — do not miss this deadline (and yes, this applies to casuals too).

Step 7: Register with Centrelink. If you received redundancy pay, there may be a waiting period before you can access income support payments — generally, a period proportional to the amount of redundancy and leave payouts you received.

Step 8: Roll over any super from an employer-linked fund if needed, and update your super fund with your new contact details.

Long service leave entitlements interact with redundancy in important ways that vary by state and territory. Unlike redundancy pay (which is set nationally under the NES), long service leave is governed by state and territory legislation, with different qualifying periods and accrual rates. In New South Wales, employees are entitled to 2 months (8.67 weeks) of long service leave after 10 years of continuous service, with pro-rata access after 5 years if the employment ends for certain reasons including redundancy.

In Victoria, the entitlement is similar — 13 weeks after 15 years, with pro-rata access after 7 years (or after 1 year under the portable long service leave scheme for certain industries). In Queensland, employees receive 8.67 weeks after 10 years, with pro-rata access from 7 years on redundancy.

In Western Australia, the qualifying period is 10 years for 8.67 weeks, with pro-rata after 7 years if made redundant. In South Australia, it is 10 years for 13 weeks, with pro-rata from 7 years. In Tasmania, 10 years for 8.67 weeks with pro-rata from 7 years on redundancy. In the ACT, 7 years for 6.07 weeks (different formula).

In the Northern Territory, 10 years for 13 weeks. The critical point for redundancy is the pro-rata access trigger — in most states, being made redundant (involuntary termination) allows you to claim pro-rata long service leave even if you haven't reached the full qualifying period.

This can add thousands of dollars to your final payout. If your employer doesn't include pro-rata long service leave in your redundancy package, check your state legislation and raise it. Many workers miss this entitlement.