How to Negotiate a Better Redundancy Package in Australia (Step-by-Step 2026)
Most employees accept the NES minimum redundancy without negotiating. Learn step-by-step how to negotiate additional weeks, outplacement, and other extras to maximise your redundancy package in 2026.
Know Your Minimum Entitlements Before You Negotiate
Before you can negotiate above the minimum, you need to know exactly what the minimum is. Under the National Employment Standards (NES), redundancy pay is based on your period of continuous service: 4 weeks for 1-2 years, 6 weeks for 2-3 years, 7 weeks for 3-4 years, 8 weeks for 4-5 years, 10 weeks for 5-6 years, 11 weeks for 6-7 years, 13 weeks for 7-8 years, 14 weeks for 8-9 years, and 16 weeks for 9-10 years and over. These are paid at your base rate of pay for ordinary hours. In addition to redundancy pay, you are entitled to payment of your notice period (1-5 weeks depending on service, plus an extra week if you are over 45 with at least 2 years of service), accrued annual leave, accrued long service leave, and any outstanding wages. Your enterprise agreement or employment contract may provide for more generous redundancy — always check these first, as they set your actual floor. Many enterprise agreements provide 3 or 4 weeks per year of service, which is significantly above the NES scale. Once you know your absolute minimum, you have a baseline from which to negotiate upward. Use our Redundancy Pay Calculator to determine your exact NES entitlement.
Understanding Your Leverage
Negotiation is about leverage, and redundancy situations often give employees more leverage than they realise. Several factors strengthen your position. Length of service is significant — if you have been with the company for many years, the employer may feel a moral obligation to treat you fairly, and the reputational risk of being seen as harsh towards long-serving staff is real. If you have specialised knowledge that would be difficult to replace or transfer, the employer needs your cooperation during the transition period, which gives you bargaining power. The employer's urgency matters too: if they need the restructure completed quickly, they are more likely to offer generous terms to avoid delays. Consider whether you have any potential legal claims. If the redundancy process was flawed, if consultation was inadequate, or if you suspect the redundancy is not genuine (for example, if you believe you are being targeted for a discriminatory reason), these potential claims are powerful leverage. You do not need to threaten litigation — simply noting that you want to ensure the process has been properly followed signals that you are informed. The employer's size and financial position also matter. Large corporations and government agencies often have established policies for above-minimum redundancy, and there may be precedent from previous restructures.
What Extras to Negotiate Beyond Additional Weeks
While additional weeks of redundancy pay is the most obvious thing to negotiate, there are many other valuable extras that employers may agree to more readily because they cost less or come from different budgets. Outplacement services — professional career coaching, resume writing, and job search support — are commonly offered and can be worth $3,000 to $15,000 depending on the level of service. Extended private health insurance coverage, where the employer continues to pay your health insurance premiums for a period after termination, can save thousands. If you have a non-compete or restraint of trade clause in your contract, negotiating a release from this restraint can be extremely valuable, as it allows you to work for competitors or start a competing business immediately. A positive written reference letter, agreed in advance, removes uncertainty about future employment. Early release from your notice period with full pay — meaning you are paid for the notice period but do not have to work it — gives you time to job search while still being paid. Some employees negotiate for the employer to contribute to retraining or further education costs. Continuation of salary sacrifice arrangements (such as novated leases) through the notice period, and the right to keep company equipment such as a laptop or phone, are also common negotiation items that employers may readily agree to.
The Negotiation Process: Step by Step
Step 1: When you are informed of the redundancy, listen carefully but do not agree to anything on the spot. Thank the employer for informing you and ask for the details in writing, including the proposed redundancy package. Step 2: Take time to review the offer. Check it against your minimum entitlements and identify any gaps or areas for improvement. Most employers will give you at least a few days, and you are entitled to ask for reasonable time. Step 3: Prepare your counter-proposal. Be specific about what you are asking for and why. Frame your requests in terms that benefit both parties — for example, 'An additional 4 weeks of redundancy pay would allow me to take the time needed to find suitable employment without financial pressure, and would reflect my 12 years of contribution to the company.' Step 4: Request a meeting to discuss the package. Bring your written counter-proposal. Be professional and measured — this is a business negotiation, not a confrontation. Step 5: Listen to the employer's response and be prepared to compromise. You are unlikely to get everything you ask for, so prioritise what matters most. Step 6: Once you reach an agreement, get everything in writing before signing anything. If the employer presents a deed of release, take it away and get independent legal advice before signing.
Tax Implications of a Negotiated Package
The tax treatment of your redundancy package depends on how it is structured, making it essential to consider tax implications during negotiation. If the redundancy is genuine and the total redundancy payment (including any negotiated additional weeks) is below the tax-free threshold ($12,524 + $6,260 per completed year of service for 2025-26), the entire amount is tax-free. Any amount above the tax-free threshold is treated as an employment termination payment (ETP) and taxed at concessional rates up to the ETP cap ($235,000 for 2025-26). This means it can be more tax-effective to receive additional redundancy pay (taxed as an ETP with potential tax-free treatment) rather than additional notice pay (taxed as ordinary income at marginal rates). When negotiating, consider asking the employer to structure the payment to maximise the component classified as genuine redundancy pay rather than wages, notice pay, or ex-gratia payments. However, the classification must reflect the true nature of the payment — the ATO will look through artificial arrangements. Some negotiated extras have different tax treatment: outplacement services provided directly by the employer are typically not taxable to the employee, whereas a cash payment for the employee to arrange their own outplacement would be. Continued health insurance premiums are generally a fringe benefit. Always seek specific tax advice from a registered tax agent before finalising your package.
Getting Legal Advice and the Deed of Release
For any redundancy package above the bare minimum, it is worth investing in legal advice from an employment lawyer. Many offer fixed-fee consultations for redundancy review, typically costing $300 to $800, which is a small price relative to the value of the package. Some employers will even contribute to your legal costs as part of the package — this is worth asking for. An employment lawyer can identify whether the redundancy is genuine and whether you have any potential claims, advise on the adequacy of the package, identify risks in the deed of release, and negotiate on your behalf if you prefer. The deed of release (also called a separation deed or settlement deed) is a critical document. By signing it, you typically agree to release the employer from any and all claims arising from your employment and its termination, including unfair dismissal, general protections, discrimination, and contractual claims. Key things to check in the deed include: the scope of the release (is it overly broad?), any restraint of trade or non-compete clauses, confidentiality obligations (what can you say about the redundancy?), the consequences of breach, and any cooperation clauses requiring you to assist the employer after termination. Never sign a deed of release without reading and understanding every clause. If anything is unclear, ask your lawyer.
When Negotiation Fails: Your Options
If the employer refuses to negotiate and offers only the NES minimum, you still have options. First, assess whether the redundancy is genuinely genuine. If you believe the employer is using redundancy as a pretext to terminate your employment for other reasons — such as performance management, personal conflict, or discrimination — you may have grounds for an unfair dismissal claim or a general protections claim. Second, consider whether the employer followed the correct consultation process required by the applicable award or enterprise agreement. A failure to genuinely consult does not invalidate the redundancy, but it can give you leverage and may support a claim. Third, if you are covered by an enterprise agreement that provides for more generous redundancy terms, ensure those terms are being applied. Fourth, if you have been employed for less than 12 months or the employer has fewer than 15 employees, you may not be entitled to NES redundancy pay at all — but the employer may still offer it as part of the separation. If you cannot improve the package through negotiation, you must decide whether to accept what is offered or pursue a legal claim. This is where legal advice is invaluable — an employment lawyer can assess the strength of any potential claim and advise whether the cost and stress of pursuing it is proportionate to the likely outcome. Remember that unfair dismissal claims must be lodged within 21 days, so do not delay.
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General information and estimates only — not legal, financial, or tax advice. Always verify with the Fair Work Ombudsman (13 13 94) or a qualified professional.
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