Laid Off in 2026? Redundancy Survival Guide: Pay, Centrelink & Next Steps

Not every job loss labelled 'redundancy' is actually a genuine redundancy under the Fair Work Act. For a redundancy to be genuine, three conditions must all be met: the employer no longer requires your job to be performed by anyone (the job itself is disappearing, not just you), the employer has complied with any consultation obligations in the applicable award or enterprise agreement, and it would not have been reasonable to redeploy you to another position within the employer's enterprise or an associated entity. If your employer makes you redundant but then hires someone else to do the same role (or a substantially similar role) shortly afterward, this is likely not a genuine redundancy — it may be an unfair dismissal disguised as a redundancy.

Similarly, if your employer did not consult with you about the proposed redundancy before making the decision (as required by most awards), the redundancy process may be deficient. If you suspect your redundancy is not genuine, you've 21 days from the date of dismissal to lodge an unfair dismissal application with the Fair Work Commission.

This is a strict deadline — don't delay in seeking advice from the FWC, a union, or a community legal centre.

Under the National Employment Standards, redundancy pay (also called severance pay) is based on your length of continuous service with the employer. The scale is: 1-2 years = 4 weeks' pay, 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, 9-10 years = 16 weeks, and 10+ years = 12 weeks. Note the scale goes up to 16 weeks at 9-10 years and then drops back to 12 weeks for 10+ years.

A 'week's pay' means your ordinary weekly wage including any regular loadings and allowances but excluding overtime, penalties, and bonuses. On top of redundancy pay, you are also entitled to your notice period (or payment in lieu), any accrued but untaken annual leave and long service leave, and any other entitlements under your award or enterprise agreement.

Small businesses with fewer than 15 employees are exempt from the NES redundancy pay obligation, though you may still be entitled to redundancy pay under your award or enterprise agreement.

Redundancy payments receive favourable tax treatment if the redundancy is genuine. A genuine redundancy payment is tax-free up to a base limit plus an additional amount for each completed year of service. For 2025-26, the tax-free base limit is approximately $13,100 plus $6,552 per completed year of service (these amounts are indexed annually).

For example, if you have worked for your employer for 8 complete years, your tax-free limit would be approximately $13,100 + (8 x $6,552) = $62,636. Any redundancy payment up to this amount is completely tax-free.

Quick version: Amounts above the tax-free limit are taxed concessionally — the first $235,000 above the limit is taxed at a maximum of 17% (including Medicare levy) rather than your marginal tax rate, and anything above that's taxed at your marginal rate. Your accrued leave payments (annual leave, long service leave) are also taxed concessionally but under different rules.

Annual leave is taxed at a maximum of 32% (or your marginal rate if lower), and long service leave accrued after 16 August 1978 is taxed at a maximum of 32%.

These concessional rates can save you thousands of dollars in tax compared to having the payments taxed as ordinary income.

After being made redundant, you may need to access Centrelink's JobSeeker Payment. However, there are waiting periods that can delay your first payment. The most significant is the income maintenance period (IMP), which applies when you receive redundancy pay, leave payouts, or other termination payments.

Centrelink treats these payments as income that must be 'used up' before benefits start, calculated by dividing your total termination payments (excluding the tax-free redundancy component) by your fortnightly pay rate to determine the number of weeks you must wait. For example, if you receive $20,000 in leave payouts and your fortnightly rate was $2,000, you would face a 10-week waiting period.

On top of the IMP, there is also a standard one-week Ordinary Waiting Period and potentially a Liquid Assets Waiting Period if your savings exceed certain thresholds ($5,500 for singles, $11,000 for couples). The key strategy is to lodge your Centrelink claim immediately after your last day of employment — even though payments won't start until the waiting periods expire, your start date is backdated to when you lodged, which affects the total duration of payments.

Once your waiting periods expire and you begin receiving JobSeeker Payment (currently around $762.70 per fortnight for a single person with no children, or $823.60 with Rent Assistance), you'll be subject to mutual obligation requirements. These include attending appointments with your employment services provider (a Workforce Australia provider), applying for a minimum number of jobs per month (currently 20 for most recipients), attending job interviews, and undertaking approved activities like volunteering, training, or Work for the Dole. Missing appointments or failing to meet mutual obligations can result in payment suspensions or cancellations.

You must report your income and any changes to your circumstances fortnightly through your myGov account. If you do any casual or part-time work while receiving JobSeeker, you can earn up to $150 per fortnight before your payment starts to reduce, and then for every dollar earned above $150, your payment reduces by 50 cents (up to $256) and 60 cents for each dollar above that.

In other words, working a few hours per week can supplement your Centrelink payment without losing it entirely.

If you have been receiving a Commonwealth income support payment (like JobSeeker) for a continuous period of 26 weeks and you are unable to meet reasonable and immediate living expenses, you may be eligible to access a limited amount of your superannuation under the financial hardship provisions. You can withdraw a single lump sum of between $1,000 and $10,000 per 12-month period. The application is made through your super fund, which will require evidence including a letter from Centrelink confirming you have been on income support for at least 26 weeks.

The payment is taxed concessionally — if you are under 60, the tax-free component is tax-free and the taxable component is taxed at your marginal rate plus a 17% offset. This should genuinely be a last resort — every dollar withdrawn from super is a dollar that won't benefit from decades of compound investment growth.

Withdrawing $10,000 from super at age 35 could cost you $60,000-$80,000 in retirement savings by age 67. Before accessing super, explore all other options: rent assistance, energy bill support programs, mortgage hardship arrangements with your bank, and state government emergency relief payments.

Being made redundant, while stressful, can also be an opportunity to pivot your career or upgrade your skills. The Australian Government's Fee-Free TAFE initiative provides funded places in courses aligned with skills shortages — including areas like technology, healthcare, aged care, construction trades, early childhood education, and hospitality. Eligibility varies by state and territory, but generally targets job seekers, young people, First Nations Australians, and workers in transitioning industries.

If you're receiving JobSeeker Payment, training counts toward your mutual obligation requirements, meaning you can study instead of (or alongside) job searching. Many states also offer Skills First or similar programs providing subsidised training at TAFE and registered training organisations.

Consider whether your redundancy is an opportunity to move into a growing sector — healthcare and social assistance, technology, and renewable energy are consistently the fastest-growing employment sectors in Australia. Your employment services provider can help you access career counselling, resume writing support, and job matching services at no cost. If you're considering starting your own business, the New Enterprise Incentive Scheme (NEIS) provides training, mentoring, and income support for eligible job seekers starting a small business.