What Is Redundancy Pay?
Redundancy pay is a lump-sum entitlement paid to employees whose position is eliminated due to operational, technological, or structural changes in a business. It is separate from your final wages, accrued annual leave payout, and notice period — and is protected under the National Employment Standards (NES) in the Fair Work Act 2009.
If you've been made redundant, use our Redundancy Pay Calculator to instantly see how much you should receive based on your years of service and weekly pay.
Who Qualifies for Redundancy Pay?
Not every dismissed employee receives redundancy pay. Under the Fair Work Act, you are entitled to redundancy pay if:
- You are a full-time or part-time employee (casuals are generally excluded)
- You have completed at least one year of continuous service
- Your employer is not a small business (fewer than 15 employees at time of dismissal)
- The redundancy is genuine — meaning the role is truly no longer required
Small business employers (fewer than 15 employees) are exempt from the redundancy pay provisions of the NES. However, they must still provide notice and pay out accrued leave.
How Much Redundancy Pay Are You Owed?
Redundancy pay is calculated based on your years of continuous service and your base rate of pay at the time of redundancy. The NES sets the following minimum scale:
| Years of Service | Weeks of Pay |
|---|---|
| 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 |
| 10+ years | 12 weeks |
Note the drop at 10+ years — this is not an error. The NES caps redundancy pay at 12 weeks for employees with over 10 years of service, partly because long-serving employees are typically covered by long service leave provisions. Check your Long Service Leave Calculator if you've been with an employer for a decade or more.
What Is a Genuine Redundancy?
A redundancy is only genuine if:
- The job is truly no longer required to be performed by anyone
- The employer consulted with the employee (and any relevant union) as required by an applicable modern award or enterprise agreement
- It was not reasonable to redeploy the employee within the business or an associated entity
If the role is advertised again shortly after you leave, or someone else is hired to do the same tasks, the redundancy may not be genuine — and you could have grounds to lodge an unfair dismissal claim.
What About Notice?
On top of redundancy pay, your employer must also provide your minimum notice period (or payment in lieu of notice). Use our Notice Period Calculator to work out how much notice you're owed based on your length of service and age.
Is Redundancy Pay Taxed?
The good news is that genuine redundancy payments are taxed at a concessional rate. For the 2025–26 income year, the tax-free component is $12,524 plus $6,264 for each completed year of service. Amounts above this threshold are taxed at a maximum rate of 32%, not your marginal rate.
Always speak to an accountant before you decide how to receive the payment — the timing and structure can meaningfully affect your tax outcome. If you want to better understand employment law concepts, books like Employment Law in Australia on Amazon can give you solid foundational knowledge.
What If Your Employer Refuses to Pay?
If your employer disputes your entitlement, contact the Fair Work Ombudsman (1300 724 690 or fairwork.gov.au). You can lodge a formal complaint and request an investigation. The FWO has the power to recover unpaid entitlements and impose penalties on non-compliant employers.