Redundancy Pay After 15 Years — The NES Trap You Need to Know [2026]
Did you know redundancy pay DROPS after 10 years under the NES? After 15 years of service, you only get 12 weeks — not 16. Learn why, what it means in dollars, and how to negotiate more.
The counter-intuitive NES redundancy scale — why it drops after 10 years
One of the most surprising aspects of Australian employment law is that the NES redundancy pay scale does not increase linearly with service. It actually decreases after 10 years. Here is the full scale: 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, 9-10 years: 16 weeks (the maximum), and 10+ years: 12 weeks. This means an employee with 15 years of service receives fewer weeks of redundancy pay (12) than an employee with 9 years (16). This seems deeply unfair, and it is a frequent source of shock and anger among long-serving employees who are made redundant. The rationale for the reduction is that employees with over 10 years of service are typically entitled to long service leave, which is meant to partially compensate for the lower redundancy pay. However, long service leave is a separate entitlement — you are entitled to it regardless of whether you are made redundant or resign — so the argument that it offsets lower redundancy pay is questionable at best. The NES scale has been criticised by unions and employee advocates since its introduction.
What 12 weeks redundancy looks like at 15 years — real dollar figures
Let us put real numbers on the 12-week redundancy entitlement for a long-serving employee. Redundancy pay is calculated on your base rate of pay for ordinary hours — which includes your base salary but does not include overtime, penalties, allowances, bonuses, or super. At a base salary of $70,000 per year, your weekly base rate is $1,346.15. Twelve weeks of redundancy pay is: 12 x $1,346.15 = $16,153.85. At $80,000 per year: weekly rate $1,538.46, twelve weeks = $18,461.54. At $90,000 per year: weekly rate $1,730.77, twelve weeks = $20,769.23. At $100,000 per year: weekly rate $1,923.08, twelve weeks = $23,076.92. Compare this to the 16 weeks a 9-year employee would receive at the same salary: at $80,000, that is $24,615.38 — over $6,000 more than the 15-year employee. On top of the redundancy pay, the 15-year employee would receive: notice period pay of 5 weeks (4 weeks plus 1 week if over 45), accrued annual leave, and long service leave. The tax-free component for a genuine redundancy with 15 completed years of service (2025-26) is: $12,524 + (15 x $6,262) = $106,454 — well above the redundancy pay amount, so the entire redundancy payment would be tax-free.
Long service leave — the supposed offset and why it does not fully compensate
The legislative rationale for reducing redundancy pay after 10 years is that long-serving employees have access to long service leave (LSL), which provides additional financial protection. However, this argument has significant holes. First, LSL is a separate entitlement that accrues regardless of how employment ends — employees who resign after 7-10 years (depending on the state) also receive LSL. So it is not a redundancy-specific benefit. Second, LSL is payment for past service — it reflects your contribution over many years. Redundancy pay, by contrast, is compensation for the loss of your job and the disruption to your career and finances. These serve different purposes and should not offset each other. Third, the amount of LSL varies by state. In NSW, it is 2 months (8.667 weeks) after 10 years. In Victoria, it is also 8.667 weeks after 10 years (with some differences for continuous service before certain dates). At $80,000 per year, 8.667 weeks of LSL is approximately $13,333. So the total of reduced redundancy (12 weeks = $18,462) plus LSL ($13,333) is $31,795. If the full 16 weeks applied, it would be $24,615 plus the same LSL ($13,333) = $37,949. The difference of approximately $6,150 is money lost purely because of the NES drop-off.
Can you negotiate more? — enterprise agreements, contracts, and deeds
The NES scale is the minimum — you can always negotiate more. Here are the avenues. Enterprise agreements: many EAs provide enhanced redundancy provisions that either maintain the 16-week maximum regardless of service length or provide a higher per-year scale (such as 3 or 4 weeks per year of service). If your workplace is renegotiating its EA, push for enhanced redundancy terms that do not include the post-10-year reduction. Employment contracts: your individual contract may contain redundancy provisions above the NES. If not, and you have bargaining leverage (particularly in specialised or senior roles), negotiate a redundancy clause into your next contract review. Deed of release negotiations: when an employer offers a redundancy package, they typically ask you to sign a deed of release waiving all future claims. This is your negotiation opportunity. You can counter the NES minimum with a request for additional weeks, citing your length of service, contribution to the business, and the inadequacy of the NES scale for long-serving employees. Employers will often agree to additional weeks to secure a clean exit and avoid the risk of an unfair dismissal claim. Voluntary redundancy: if the employer is offering voluntary redundancies, the package typically includes an incentive above the NES minimum. Employers know that experienced, long-serving employees are harder to replace and more likely to challenge an involuntary redundancy.
Award and enterprise agreement provisions that may be better than the NES
Before accepting the NES minimum, check whether your modern award or enterprise agreement provides a more generous redundancy scale. Some awards and many enterprise agreements override the NES scale with better provisions. For example, several public sector enterprise agreements provide 3 weeks per year of service with no reduction after 10 years. Some private sector EAs in industries like banking, telecommunications, and manufacturing provide enhanced scales of 2.5 to 4 weeks per year. The redundancy provisions in your award or EA cannot be less generous than the NES (the better off overall test ensures this), but they can be significantly more generous. To check, find your applicable award or EA on the Fair Work Commission's website (fwc.gov.au) and look for the redundancy or termination clause. If your EA provides, say, 3 weeks per year of service, then 15 years would give you 45 weeks — nearly four times the NES minimum. This is why enterprise bargaining matters. Some awards also provide industry-specific redundancy schemes. The Building and Construction General On-site Award, for example, references the industry redundancy fund (CIRT/Incolink/BERT depending on the state), which provides payments based on service hours rather than the NES scale. If you are in doubt about which instrument applies to you, contact the Fair Work Infoline on 13 13 94.
Tax treatment of redundancy pay — the silver lining for long-serving employees
While the NES redundancy pay scale is disappointing for long-serving employees, the tax treatment provides a significant silver lining. Genuine redundancy payments receive a generous tax-free component that increases with years of service. For 2025-26, the tax-free limit is: $12,524 (base amount) plus $6,262 for each completed year of service. For 15 complete years: $12,524 + (15 x $6,262) = $106,454 tax-free. This means your entire 12-week NES redundancy payment (which would be around $18,000 to $30,000 depending on salary) falls well within the tax-free limit and you pay zero tax on it. Any amount above the tax-free limit (which would only apply if you negotiate a significantly enhanced package or have a very high salary) is taxed at a maximum of 17% up to $230,000. Your notice period payment and accrued leave are taxed separately — notice at marginal rates, annual leave at marginal rates for resignation and concessional rates for redundancy, and long service leave at concessional rates for the pre-16 August 1978 component and marginal rates for the post-16 August 1978 component. Use our Redundancy Tax Calculator to work out the exact tax-free component and after-tax payout for your specific situation.
Challenging the redundancy — when 15 years of service works in your favour
While the NES scale is lower, 15 years of service gives you strong standing to challenge a redundancy that is not genuine or was not handled fairly. The Fair Work Commission takes length of service very seriously as a factor in unfair dismissal and redundancy disputes. If you have 15 years of loyal service and the employer did not properly consult with you, did not genuinely explore redeployment options, selected you for redundancy using unfair criteria, or the position has not actually been eliminated (someone else is doing your work), you have strong grounds for an unfair dismissal claim. The Commission is more likely to find a dismissal was harsh if a long-serving employee was not given every opportunity for redeployment, was not offered outplacement support, or was treated without dignity. If your employer is offering a voluntary redundancy package that only includes the NES minimum 12 weeks, you are not obligated to accept. You can negotiate for better terms, decline the voluntary offer and wait for the employer to proceed with involuntary redundancy (which requires a more rigorous process), or seek advice about whether the redundancy is genuine. Use our Redundancy Pay Calculator to verify you are receiving at least the NES minimum, and consider seeking legal advice or union support to negotiate a package that properly reflects 15 years of service.
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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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