Voluntary redundancy and whether to take it

What voluntary redundancy means

The Fair Work Ombudsman describes voluntary redundancy as a redundancy that the employer offers and the employee voluntarily accepts. It's still a redundancy. The employer has decided it needs fewer people to do a particular kind of work, and asking for volunteers is one way of deciding who leaves.

For a redundancy to be genuine, the Fair Work Ombudsman says the job must no longer need to be done by anyone because of changes in the business, and the employer must follow the consultation requirements in the relevant award or enterprise agreement. Consultation includes giving affected employees written information about the proposed changes and considering their suggestions. You may hear about a voluntary scheme during that process, and it's a reasonable time to ask questions about it.

Volunteering doesn't necessarily mean you'll be chosen. The employer still decides which roles go, and it may accept some volunteers and not others, depending on the skills it wants to keep. It's worth asking early how that choice will be made.

What the package is likely to include

A voluntary redundancy package is generally built from the same parts as any other redundancy: redundancy pay, notice (worked or paid out), any outstanding wages, and unused annual leave and long service leave. The Fair Work Ombudsman sets out the minimum redundancy pay under the National Employment Standards, which is between 4 and 16 weeks' pay depending on your length of service. Our guide to what you're owed when you're made redundant goes through the full scale and the first practical steps.

Some employers offer more than the minimum to encourage volunteers, and an award or enterprise agreement may set a different entitlement. The written offer should tell you how the figure was calculated. If it doesn't, ask for a breakdown before you decide, so you can compare it with what you'd receive if your role were made redundant later without a voluntary scheme.

Minimum redundancy pay under the National Employment Standards doesn't apply to everyone. According to the Fair Work Ombudsman, employees with less than 12 months of continuous service, casual employees, apprentices and most employees of a small business (fewer than 15 employees) don't get it. If you're in one of those groups, anything on offer comes from your award, agreement or the employer's own scheme, which makes the written terms even more important.

How volunteering affects tax on the payout

Genuine redundancy payments are tax-free up to a limit, covered in full in how redundancy pay is taxed. For the 2026-27 financial year, the ATO sets that limit at $13,598 plus $6,801 for each completed year of service. Unused annual leave and long service leave aren't part of the tax-free amount.

The ATO's list of non-genuine redundancies includes "leaving voluntarily", which can make voluntary redundancy look risky. The ATO's ruling on genuine redundancy payments, TR 2009/2, explains the difference. When an employee volunteers for a redundancy package, the ATO's view is that there may still be a dismissal if the employer started the process and has the final say on whose employment ends. That is a different situation from resigning.

The same ruling sets out other conditions. You need to be under Age Pension age when you're dismissed (currently 67, according to Services Australia), and there must be no arrangement for you to be employed again by the employer after you leave. That second condition matters if you've been sounded out about coming back on a contract. Your employer works out how much tax to withhold, so you could ask how they plan to treat the payment before you accept.

Things to weigh before you volunteer

There's no single right answer, and the same package can suit one person and not another. These are the questions that tend to shape the decision.

What happens if you stay? Ask what the team will look like after the restructure. If fewer people will be covering the same work, your role may change more than the job title suggests. On the other hand, if the business is cutting a set number of roles and not enough people volunteer, some roles may still be made redundant, and the terms of a later redundancy may not match the voluntary offer.

How long would the money last? Think about how long it usually takes to find work in your field and at your level, and what your regular costs are. If you plan to claim JobSeeker Payment, Services Australia may apply an income maintenance period based on the lump sum your employer paid. It gives the example that a 10-week redundancy payment may result in a 10-week waiting period. A liquid assets waiting period of one to 13 weeks can also apply if your savings are over certain limits, and money your employer still owes you counts towards that.

Are you close to a service milestone? Minimum redundancy pay steps down from 16 weeks to 12 once you reach 10 years' service, while long service leave entitlements depend on your state or territory and how long you've worked there. If you're a few months short of qualifying for long service leave, or just short of a step in the redundancy scale, the timing can change the value of the package. Our long service leave guide explains the rules where you work.

Does your age change things? The ATO says you can generally access your super once you reach your preservation age and retire, or when you turn 65. If you're weighing voluntary redundancy as a step towards retirement, a licensed financial adviser can look at how the payout, your super and any pension entitlement fit together.

What would you do next? Some people take voluntary redundancy because they already have another job lined up, want to study or were thinking of changing careers anyway. If that's you, the package can give you time. If you would be starting a job search from scratch, it may help to update your resume and look at current job ads for your role before the offer closes, so you have a realistic sense of the market.

Questions to ask your employer

If the offer has a closing date, raising these questions early gives you time to get answers before you commit. You could ask:

• For a written estimate of your full package, with redundancy pay, notice, leave and any extra payment shown separately
• How volunteers will be selected, and when you'll find out whether you've been accepted
• Whether you can withdraw your expression of interest before it's accepted
• What your last day would be, and whether notice will be worked or paid out
• Whether redeployment to another role has been considered
• Whether you'll be asked to sign any document as part of accepting the package
• Whether support such as outplacement services or an employee assistance program is available after you leave
• Whether the employer will complete an Employment Separation Certificate, which Services Australia may ask for if you claim a payment

The separation certificate records why your employment ended, including whether you left voluntarily. If you've accepted a redundancy the employer offered, check that your paperwork describes it that way.

If you're unsure about the offer

If the package doesn't match what you expected, or you're asked to sign a document giving up future claims against the employer, it's worth getting advice before you sign. The Fair Work Ombudsman can explain your minimum entitlements on 13 13 94 and has a Notice and Redundancy Calculator that works out notice and redundancy pay from your dates of employment. A union, if you're a member, can also help you read the terms. For questions about whether a redundancy is genuine, the Fair Work Ombudsman suggests seeking legal advice.

Choosing to stay is also a legitimate decision. If your role is later made redundant, the employer still needs to meet the requirements for a genuine redundancy, including consultation and considering whether you could reasonably be given another job in the business.