Question 1

How is the statutory minimum redundancy pay calculated in Australia?

Accepted Answer

Section 119 of the Fair Work Act 2009 sets the redundancy pay scale. It runs from 4 weeks of pay (1+ year service) up to 16 weeks (9+ years), then caps back to 12 weeks at 10+ years — a known quirk of the section. Small businesses (under 15 employees) are exempt under section 121. The minimum is calculated on ordinary base pay, not including super or commissions.

Question 2

What makes a redundancy 'genuine'?

Accepted Answer

Section 389 of the Fair Work Act sets three limbs for a genuine redundancy: (1) the role is no longer required because of operational changes; (2) the employer complied with consultation obligations under any modern award or enterprise agreement; (3) it would not have been reasonable to redeploy you to another role within the business or an associated entity. If any limb fails, the redundancy is not 'genuine' for unfair-dismissal purposes — and you may have a valid s.394 claim.

Question 3

Should I sign the deed of release with the package?

Accepted Answer

A deed of release usually waives your right to bring claims (including unfair dismissal). Don't sign one until you've taken your own advice. Most workplace lawyers offer a free first call. If the deed is offered with a 'sign by Friday' deadline, you can ask for an extension — and an unwillingness to extend is itself a flag worth noting.

Question 4

What's the 21-day clock?

Accepted Answer

An unfair dismissal application (s.394) and a general protections application involving dismissal (s.365) both have a 21-day time limit from the date the dismissal takes effect. That clock does not pause for negotiation, internal correspondence, or redundancy package discussions. If the redundancy might not be genuine, missing the 21-day deadline forecloses your strongest remedy. If you're seriously considering challenging, get advice in parallel — don't burn the clock on negotiation.

Question 5

Is the redundancy package taxed differently from ordinary income?

Accepted Answer

Yes — if the redundancy is 'genuine' under ATO rules. The first slice of a genuine redundancy payment is tax-free up to a cap ($11,985 base + $5,994 per year of service for 2025-26). Anything above the cap is taxed as an Employment Termination Payment (ETP) at concessional rates. If the redundancy is not genuine for ATO purposes (e.g. you reach the age beyond which payments aren't redundancy), the whole payment is taxed as ordinary income. Note: the ATO 'genuine' test and the Fair Work Act 'genuine' test are different — a payment can be a genuine redundancy for tax but not for unfair-dismissal purposes, or vice versa.

Should I Accept This Redundancy Package?

Before you sign anything

Your situation

The process

Your view of the redundancy

Related Tools

Recommended partners

Employment Hero

Law Tram

Frontrow Tech