Around 268,000 Australians were retrenched in the year to February 2025, roughly 12% of everyone who left or lost a job (Australian Bureau of Statistics, 2025). If you are one of them, the first question is brutally practical: what am I actually owed? Under the National Employment Standards, redundancy pay in Australia scales from 4 weeks' pay up to a maximum of 16 weeks (Fair Work Ombudsman, 2026). But several conditions decide whether you get anything at all, and the tax rules quietly reshape what lands in your account.
This guide gives you the number and the catches: the full entitlement scale, what makes a redundancy "genuine", how tax applies, who misses out, and how redundancy pay differs from notice. Not sure where your situation fits? Start with the employment law in Australia complete guide.
TL;DR: Under the National Employment Standards, redundancy pay in Australia scales from 4 weeks' pay (after 1 year of service) up to 16 weeks (9–10 years), based on your ordinary base rate. For 2025–26 the first $13,100 plus $6,552 per completed year of a genuine redundancy is tax-free. Small businesses with fewer than 15 employees are generally exempt (Fair Work Ombudsman; ATO, 2025).
How Much Redundancy Pay Are You Entitled To?
NES redundancy pay is based on your continuous service, running from 4 weeks' pay after 1 year up to a maximum of 16 weeks at 9–10 years, calculated on your ordinary base rate (Fair Work Ombudsman, 2026). The base rate is your normal pay for ordinary hours. It excludes overtime, bonuses, commissions, and allowances.
Here is the part that surprises people. The scale does not keep climbing. It peaks at 16 weeks for 9 to 10 years of service, then drops back to 12 weeks for employees with 10 or more years. Why? Because long-serving staff become entitled to long service leave, and the standard was set with that trade-off in mind. A decade in, you do not get more redundancy pay than someone with nine years.
Redundancy pay under the National Employment Standards runs from 4 weeks at one year of service to a 16-week maximum at 9–10 years, then falls back to 12 weeks beyond 10 years (Fair Work Ombudsman, 2026). It is calculated on ordinary base pay, so overtime, bonuses and allowances do not count toward the figure.
Work out your number: Skip the manual maths and use the free Law Firms Australia redundancy pay calculator to estimate your NES entitlement and tax-free amount from your start date and salary in under a minute.
What Counts as a Genuine Redundancy?
A redundancy is genuine when your job is no longer required to be done by anyone, the decision is not about your conduct or performance, and the employer has met any consultation obligations in your award or agreement (Fair Work Ombudsman, 2026). The test is about the role, not the person. The work disappears, not just the worker.
Under section 389 of the Fair Work Act, a dismissal is a genuine redundancy only if the employer no longer needs the job done by anyone due to operational changes and has met any award or agreement consultation obligation, and only if redeployment was not reasonable (Fair Work Act 2009 s.389; Fair Work Commission, 2026). Where those conditions fail, the dismissal may not be a genuine redundancy at all.
The redeployment test got tougher in 2025. The High Court confirmed the Fair Work Commission can ask whether it would have been reasonable for an employer to restructure its workforce, including insourcing work given to contractors, to keep a redundant employee on (Fair Work Commission, 2025). Skipping that step can sink the "genuine" label.
This matters far beyond the payout. A redundancy that is not genuine can become an unfair dismissal. If your employer dressed up a performance sacking as a "restructure", skipped consultation your award required, or had a suitable role they could have moved you into, the Fair Work Commission may treat it as a dismissal you can challenge. The two concepts most articles silo are tightly linked. Read more in our guide to unfair dismissal in Australia.
Is Redundancy Pay Taxed in Australia?
A genuine redundancy payment is tax-free up to a limit: $13,100 plus $6,552 for each completed year of service for 2025–26, with anything above taxed under employment termination payment (ETP) rules (ATO, 2025). These figures are indexed each financial year, so confirm the current amounts with the ATO before you rely on them.
For 2025–26, a genuine redundancy is tax-free up to $13,100 plus $6,552 per completed year of service, and only the excess is taxed as an employment termination payment (ATO, 2025). The concession applies only if you are below age-pension age on your last working day.
A worked example makes it concrete. Five completed years gives a tax-free cap of $13,100 + (5 × $6,552) = $45,860. If your genuine redundancy payment is below that, you keep it tax-free. Two cautions: the tax-free treatment applies only if you are under age-pension age, and unused annual and long service leave are taxed separately under their own rules, not as part of the tax-free redundancy amount.
Do Small Businesses Have to Pay Redundancy?
Generally, no. Businesses with fewer than 15 employees at the time of the redundancy are exempt from NES redundancy pay (Fair Work Ombudsman, 2026). The headcount counts all employees of the business and any associated entities, including the departing worker, and casuals if they are employed on a regular and systematic basis.
Small businesses with fewer than 15 employees are generally exempt from paying NES redundancy pay, though the headcount includes regular casuals and associated entities (Fair Work Ombudsman, 2026). An award, enterprise agreement, or employment contract can override this and still require payment.
The exemption is not absolute. Some modern awards and many enterprise agreements set their own redundancy terms that apply regardless of headcount, and a contract can promise redundancy pay a small employer would not otherwise owe. If you work for a small business, check the instrument that covers your role before assuming you get nothing.
Redundancy Pay vs Notice: What's the Difference?
Redundancy (severance) pay and notice of termination are two separate entitlements under the National Employment Standards, and you can be owed both (Fair Work Ombudsman, 2026). Notice ranges from 1 to 4 weeks based on service, with an extra week if you are over 45 with at least two years' service. Redundancy pay sits on top of that.
The notice scale is shorter than the redundancy one: 1 week for under 1 year, 2 weeks for 1–3 years, 3 weeks for 3–5 years, and 4 weeks for more than 5 years (Fair Work Ombudsman, 2026). So a worker with six years' service could receive 4 weeks' notice (or pay in lieu) plus 11 weeks' redundancy pay, two distinct amounts on the one final payslip.
In our experience helping readers make sense of a final payout, this is the single most common confusion. People see one lump sum and assume it covers everything, or they conflate the two and think notice replaces redundancy pay. It does not. Your employer can either have you work out your notice period or pay you in lieu of it, and your redundancy (severance) pay is calculated and paid in addition. Always read the breakdown on your final pay statement so you can check both components are there.Who Doesn't Get Redundancy Pay?
Several groups are excluded from NES redundancy pay, including employees with under 12 months' continuous service, most casuals, employees on fixed-term or specific-task contracts that simply end, and small-business employees (Fair Work Ombudsman, 2026). Apprentices and trainees engaged for a set term are also generally excluded.
Excluded from redundancy pay are employees with less than 12 months' service, casual employees, fixed-term and task-based contract staff whose engagement simply ends, and small-business employees (Fair Work Ombudsman, 2026). The minimum 12-month service requirement catches more people than any other exclusion.
Classification is where this gets slippery. If you were labelled an independent contractor but actually worked like an employee, you may have been wrongly excluded from entitlements you should have received. Misclassification is common, so it is worth checking your real status in our contractor vs employee guide before you accept that you get nothing.
What Should You Do If You're Made Redundant?
Work through it in order: confirm your length of continuous service, check the redundancy is genuine, calculate your entitlement and the tax-free portion, and get advice if anything looks off (Fair Work Ombudsman, 2026). Free help is available before you ever pay for a lawyer.
A practical checklist:
- Confirm your service — note your exact start date; the 12-month threshold and the pay scale both turn on it.
- Test whether it is genuine — was the role truly abolished, were you consulted, was redeployment considered?
- Do the maths — apply the NES week scale, then the ATO tax-free limit to your figure, or run it through the redundancy pay calculator.
- Check notice separately — confirm notice (or pay in lieu) is included on top of redundancy pay.
- Get advice if it smells wrong — a non-genuine redundancy may be an unfair dismissal, and that has a strict 21-day deadline.
Use the Fair Work Ombudsman's free resources first. If your redundancy looks non-genuine or the numbers do not add up, weigh the cost of advice using our guide to how much a lawyer costs in Australia, then use the directory to find an independent employment lawyer in your state.
Frequently Asked Questions
How many weeks of redundancy pay will I get?
Between 4 and 16 weeks, depending on your continuous service. It starts at 4 weeks after one year, rises to a maximum of 16 weeks at 9–10 years, then drops back to 12 weeks beyond 10 years (Fair Work Ombudsman, 2026). It is paid at your ordinary base rate.
Is my redundancy payment tax-free?
A genuine redundancy is tax-free up to $13,100 plus $6,552 for each completed year of service for 2025–26, with the excess taxed under ETP rules (ATO, 2025). The concession applies only if you are under age-pension age, and these limits are indexed annually.
Can I get redundancy pay after less than a year?
No. You need at least 12 months of continuous service to qualify for NES redundancy pay (Fair Work Ombudsman, 2026). Below that threshold there is no NES entitlement, though you are still owed any applicable notice and your unused leave.
Does my small employer have to pay redundancy?
Generally not. Businesses with fewer than 15 employees at the time of the redundancy are exempt under the National Employment Standards (Fair Work Ombudsman, 2026). But an award, enterprise agreement, or your contract can still require payment, so check the instrument covering your role.
Can I claim unfair dismissal if my redundancy wasn't genuine?
Yes. If the role was not truly redundant, consultation was skipped, or redeployment was reasonable and ignored, a "redundancy" can be treated as an unfair dismissal (Fair Work Ombudsman, 2026). The Fair Work Commission deadline is just 21 days, so act fast.
Conclusion
Redundancy pay looks simple until the conditions and the tax rules collide with your actual situation. Get the number right, then check the catches. Key takeaways:
- NES redundancy pay scales from 4 weeks at 1 year to a maximum of 16 weeks at 9–10 years, dropping back to 12 weeks beyond 10 years
- It is paid on your ordinary base rate — overtime, bonuses and allowances do not count
- A genuine redundancy is tax-free up to $13,100 + $6,552 per completed year for 2025–26
- Businesses with fewer than 15 employees are generally exempt, but awards and contracts can override that
- A non-genuine redundancy can be an unfair dismissal, with a strict 21-day deadline to act
Work out your number with the free redundancy pay calculator, confirm the redundancy is genuine, and if it is not, use the directory to find an independent employment lawyer in your state before the deadline passes.
Dig deeper into your employment rights:
- Employment Law in Australia: Employee Rights Complete Guide
- Unfair Dismissal in Australia: How to Make a Claim
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