Redundancy pay in Australia: what you're owed

A redundancy happens when your employer no longer needs your job to be done by anyone, for example because of a restructure, new technology or the business closing. Most permanent employees are then entitled to redundancy pay, notice and their unused leave.

Redundancy pay under the National Employment Standards

Redundancy pay is worked out at your base rate of pay for your ordinary hours, so overtime, bonuses, allowances and penalty rates aren't included. The drop at 10 years reflects the assumption that long-serving employees are also entitled to long service leave.

Who usually misses out

• Employees with less than 12 months of continuous service
• Casual employees
• Employees on a fixed-term, project or seasonal contract
• Apprentices, and trainees employed only for their training
• Anyone dismissed for serious misconduct
• Employees of a business with fewer than 15 employees, with some exceptions

Your award or enterprise agreement can give you more than these minimums, so check it.

Notice

Your employer must also give you notice or pay you instead: 1 week with up to 1 year of service, 2 weeks up to 3 years, 3 weeks up to 5 years and 4 weeks after that. If you are 45 or older and have at least 2 years' service, add another week.

Tax on a redundancy payout

For a genuine redundancy in 2026–27, the first $13,598 plus $6,801 for each completed year of service is tax-free. Any redundancy pay above that is taxed as an employment termination payment. Notice paid in lieu and unused annual leave are taxed as normal income.

For example, with 8 completed years the tax-free amount is $68,006, which covers the 14 weeks of NES redundancy pay for anyone earning less than about $252,594 a year.