Redundancy Pay Rights in Australia: What You're Entitled To

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:

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:

1. The job is truly no longer required to be performed by anyone
2. The employer consulted with the employee (and any relevant union) as required by an applicable modern award or enterprise agreement
3. 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.

Worked Example: How Melissa's Redundancy Payout Was Calculated

Melissa worked as a logistics coordinator for a mid-sized freight company in Brisbane for 6 years and 8 months. In March 2025, the company restructured and eliminated her role entirely. Here's how her entitlements were calculated.

Base rate of pay: $1,450 per week (38-hour week at $38.16 per hour)

Continuous service: 6 years and 8 months. For redundancy pay purposes, this rounds down to 6 complete years (the NES counts only full years of service).

Redundancy pay: According to the table above, 6 complete years of service entitles Melissa to 11 weeks of pay. That's 11 × $1,450 = $15,950.

Notice period: With 6 years of service and under 45 years of age, Melissa is entitled to 3 weeks' notice under the NES. Her employer provided one week's notice and paid the remaining two weeks in lieu: 2 × $1,450 = $2,900.

Accrued annual leave: Melissa had 78 hours of unused annual leave. At her hourly rate of $38.16, that's 78 × $38.16 = $2,976.48.

Total payout: $15,950 + $2,900 + $2,976.48 = $21,826.48 before tax.

For tax purposes, Melissa's redundancy pay tax-free threshold is $12,524 + (6 × $6,264) = $50,108. Since her $15,950 redundancy payment is well below this, the entire redundancy portion is tax-free. Only her notice payment and annual leave are taxed at her marginal rate.

Melissa received her payout within seven days of her last day of work. She also received a detailed separation certificate and an Employment Separation Certificate for Centrelink, which she used to claim JobSeeker Payment while searching for her next role.

Common Mistakes Employers and Employees Make

Redundancy situations are stressful, and both parties often make errors that can cost time, money, or legal rights. Here are the most common pitfalls.

Mistake 1: Assuming All Employees Get Redundancy Pay

Casual employees are not entitled to redundancy pay under the NES, even if they've worked regular shifts for years. Some awards and enterprise agreements do provide redundancy entitlements for casuals, but these are exceptions. Always check the specific award or agreement that covers your role.

Mistake 2: Counting Incomplete Years of Service

Redundancy pay is based on complete years only. If you've worked 4 years and 11 months, you're entitled to the 4-5 year rate (8 weeks), not the 5-6 year rate (10 weeks). That extra month doesn't count until you hit the full five-year mark.

Mistake 3: Confusing Notice Pay with Redundancy Pay

These are separate entitlements. Notice pay compensates you for the period between being told you're redundant and your last day. Redundancy pay compensates you for losing your job. You are entitled to both, and they are calculated differently.

Mistake 4: Accepting a "Redundancy" That Isn't Genuine

Some employers use redundancy as a way to dismiss underperforming staff without going through a proper performance management process. If your role is advertised within weeks of your departure, or a contractor is hired to do your job, the redundancy may not be genuine. This could give you grounds to challenge the dismissal and claim compensation for unfair dismissal.

Mistake 5: Not Checking Your Award or Agreement

The NES sets the legal minimum, but many modern awards and enterprise agreements provide higher redundancy entitlements. For example, some agreements offer 16 or even 20 weeks of redundancy pay for long-serving employees. Always request a copy of your applicable award or agreement and check the redundancy clause before accepting a payout.

Mistake 6: Forgetting About Superannuation on Redundancy Payments

Employers must pay superannuation on notice payments and unused annual leave, but not on genuine redundancy payments. If your employer has included super on your redundancy pay, double-check the payment breakdown. It may mean they've classified part of it differently, or made an error.

What Happens If You're On a Visa or Have Recently Changed Jobs?

Redundancy law applies to most employees in Australia, but visa holders and those with interrupted service face specific complications.

Temporary Visa Holders

If you're on a temporary work visa (such as a 482 or 494), you are still entitled to redundancy pay under the same rules as Australian citizens and permanent residents, provided you meet the eligibility criteria. However, losing your job may affect your visa status. You'll typically need to find a new sponsor within 60 days, or apply for a different visa class, or leave Australia.

Contact the Department of Home Affairs as soon as you're notified of redundancy to understand your visa obligations. Redundancy pay and final entitlements should still be paid in full before you depart or transition to a new sponsor.

Broken Service and Continuous Employment

Continuous service is critical for redundancy pay calculations. If you resign and are later rehired by the same employer, your service clock usually resets to zero. However, there are exceptions. If you were rehired within a short break (often defined as less than three months), or if your enterprise agreement or award contains a "continuous service" clause that bridges certain breaks, your total service may still count.

Common situations where service may be preserved include:

• Parental leave (paid or unpaid) — this does not break continuous service
• Workers' compensation leave
• Authorised unpaid leave
• Transfer between related corporate entities

If you've had a break in service and your employer is calculating redundancy based only on your most recent start date, ask whether your prior service should count under the relevant award or agreement.

Redundancy vs Voluntary Redundancy: Know the Difference

Not all redundancies are forced. Some employers offer voluntary redundancy programs, where employees can nominate to leave in exchange for a payout. The legal and financial implications differ from compulsory redundancy.

How Voluntary Redundancy Works

In a voluntary redundancy scenario, the employer invites employees to apply to be made redundant, usually offering an enhanced payout as an incentive. These offers often exceed the NES minimums — for example, an employer might offer 15 weeks' pay for someone entitled to only 10 under the NES.

Voluntary redundancy is still a genuine redundancy for tax purposes, provided the role is genuinely being eliminated and the employee meets the usual criteria. That means you still get concessional tax treatment on the payment.

Key Differences to Watch

One major difference: if you apply for and accept a voluntary redundancy, you generally cannot later claim unfair dismissal. By volunteering, you've agreed to the termination. However, you can still pursue underpayment claims if the employer fails to pay the agreed amount.

Another consideration is Centrelink. If you accept a voluntary redundancy, you may be subject to a waiting period before you can receive JobSeeker Payment. This is called an income maintenance period, and it's based on the amount of notice or payment in lieu you received. If you were compulsorily made redundant, different rules may apply. Always check with Services Australia before assuming you're immediately eligible for income support.

Should You Take a Voluntary Redundancy Offer?

It depends on your situation. If you were already considering leaving, or if the package is generous, it can be a good outcome. But don't feel pressured. Employers sometimes use voluntary programs to reduce headcount without legal risk, and the offers aren't always as good as they seem once you factor in lost super contributions, loss of income, and potential Centrelink waiting periods.

Get independent advice before you sign. A lawyer or union representative can review the offer and let you know whether it's fair compared to what you'd receive under a compulsory redundancy.