What you're owed when you're made redundant

How much redundancy pay you're entitled to

Most employees get their redundancy entitlement from the National Employment Standards, and it scales with how long you've worked there. Fair Work Ombudsman's redundancy pay page sets out the minimum, in weeks of pay. The final step in the scale is lower than the one before it, which the explanation after the list covers.

• At least 1 year but less than 2: 4 weeks
• At least 2 years but less than 3: 6 weeks
• At least 3 years but less than 4: 7 weeks
• At least 4 years but less than 5: 8 weeks
• At least 5 years but less than 6: 10 weeks
• At least 6 years but less than 7: 11 weeks
• At least 7 years but less than 8: 13 weeks
• At least 8 years but less than 9: 14 weeks
• At least 9 years but less than 10: 16 weeks
• 10 years or more: 12 weeks

Redundancy pay under the NES falls from 16 weeks back to 12 weeks once you pass 10 years of continuous service. That step down is deliberate rather than an error, and Fair Work's own library records the reasoning: at that point, long service leave is usually being paid out at the same time, and the redundancy scale was set with that in mind (Fair Work Commission, Redundancy Case, PR032004, [2004] AIRC 287).

This scale doesn't apply to everyone. You need at least a year of continuous service, and your employer needs to employ 15 or more people; most small business employers don't have to pay redundancy pay under the NES at all. If you're covered by an award or an enterprise agreement, check it directly, since some set different amounts. Fair Work's Notice and Redundancy Calculator will run the numbers against your specific dates.

How much of your payout is tax-free

Genuine redundancy payments are tax-free up to a limit that changes every year. For the 2026-27 financial year, the ATO sets that limit at $13,598 plus $6,801 for each completed year of service. Someone with 8 completed years, for example, has a tax-free limit of $13,598 plus 8 times $6,801, which comes to $67,806.

Only completed years count towards that figure. Eleven months of service adds nothing to the limit; a full year adds another $6,801.

This tax-free amount only applies to the genuine redundancy part of your payout, meaning severance pay and payment in lieu of notice. It doesn't cover unused annual leave or unused long service leave, which are taxed under separate rules, covered in full in how redundancy pay is taxed, and paid out regardless of whether your redundancy is genuine. So a total payout larger than the tax-free limit is normal, and doesn't mean the calculation is wrong.

What to do in the first week

Once you have the news in hand, a few things are worth sorting out early, while your employer's payroll and HR contacts are still easy to reach.

• Get it in writing: ask for a termination letter showing your last day, your notice period, and a line-by-line breakdown of what's in your final pay.
• Check the maths: run your own dates through Fair Work's Notice and Redundancy Calculator before you sign anything, especially if you're close to a service milestone like the 10-year mark above.
• Ask for a separation certificate: you need this from your employer to claim JobSeeker Payment or other government support.
• Claim early, even without the money yet: Services Australia will assess a JobSeeker claim before your final payment arrives and tell you when payments will start.

A lump sum redundancy payment can trigger what Services Australia calls an income maintenance period: a length of time before JobSeeker Payment starts, or starts at a reduced rate, calculated from how much your employer paid you. A 10-week redundancy payment, for example, may mean a 10-week wait. If you were expecting Centrelink support straight away, it helps to find out the likely start date early and plan your budget around it. Severe financial hardship can sometimes get the waiting period reduced or waived, so ask Services Australia if that applies to you.

It's worth checking the figures against the scale above even if the breakdown looks about right. If your payout doesn't match what's set out here, or your employer won't put the breakdown in writing, the Fair Work Infoline on 13 13 94 can tell you whether it's correct.