Being made redundant is stressful, and the first thing most people want to know is "how much am I getting paid?" The good news is that in Australia, the baseline is fixed in law — so even before you've had a conversation with your employer, you can work out the minimum redundancy pay you're entitled to. The less good news is that the rules have some quirks, and the net amount that actually lands in your bank account depends on tax treatment that many people don't learn about until it's too late.
This article walks through what the law guarantees, the eligibility rules, how tax applies to redundancy payouts, and the specific documents you can check to see whether your individual situation entitles you to more than the legislated minimum. It sticks to what's actually legislated — because the last thing someone facing a redundancy needs is inflated expectations. If your contract, enterprise agreement or employer policy gives you more than the minimum, that's a bonus. The minimum is what the law guarantees.
We'll also walk you through our free Redundancy Pay Calculator, which takes your years of service, weekly base pay and tax year and shows you both the gross payout and the estimated net amount after tax.
The National Employment Standards — usually just called the NES — are eleven minimum employment entitlements set by the federal Fair Work Act 2009. They cover things like maximum hours of work, annual leave, personal leave, public holidays, notice periods and, relevant here, redundancy pay. The NES is the floor for employment conditions in Australia. An employer cannot pay you less than the NES sets out, regardless of what your contract says.
Redundancy pay is entitlement number ten on the list. The NES specifies exactly how many weeks of pay you receive for each year of continuous service, and this scale has not changed since 2009. It is administered by the Fair Work Ombudsman, which is the independent federal agency that enforces workplace laws in Australia.
Two important things about the NES minimum:
The NES scale is based on your continuous period of service with the employer. "Continuous service" generally includes paid leave periods but does not usually include unpaid absences. Service with related companies in the same corporate group usually counts too.
| Period of continuous service | Minimum redundancy pay |
|---|---|
| Less than 1 year | No minimum (none payable under NES) |
| 1 year to less than 2 years | 4 weeks' pay |
| 2 years to less than 3 years | 6 weeks' pay |
| 3 years to less than 4 years | 7 weeks' pay |
| 4 years to less than 5 years | 8 weeks' pay |
| 5 years to less than 6 years | 10 weeks' pay |
| 6 years to less than 7 years | 11 weeks' pay |
| 7 years to less than 8 years | 13 weeks' pay |
| 8 years to less than 9 years | 14 weeks' pay |
| 9 years to less than 10 years | 16 weeks' pay |
| 10 years or more | 12 weeks' pay |
The reduction from 16 weeks to 12 weeks at the 10-year mark isn't a mistake. It reflects how redundancy pay and long service leave interact — the Fair Work Act assumes that people with 10+ years of service will typically also be entitled to long service leave, so the redundancy component is reduced. In practice, your total termination payment (redundancy + long service leave + accrued annual leave) usually goes up with each extra year of service, even if the redundancy line goes down.
This is the detail most people get wrong. Under the NES, redundancy pay is calculated at your base rate of pay for your ordinary hours of work. That means:
If your total package sits well above your base pay because of regular bonuses or shift work, your redundancy calculation will be based on the smaller base figure. This is important to understand before you start counting what you'll receive.
There are exceptions. Some enterprise agreements and modern awards specify that redundancy pay should be calculated on a broader definition — for instance, average weekly earnings including loadings. Your specific industrial instrument may give you more than the NES default. That's why the checklist below matters.
To qualify for NES redundancy pay, three tests generally apply:
The three most common situations where people are NOT covered:
If you fall outside NES coverage, that doesn't automatically mean you get nothing. Your employment contract may include a contractual redundancy clause. Award coverage is broad in Australia and worth checking even if you think you're exempt from the NES.
Redundancy pay is only one line item. When your employment ends, several other entitlements are also paid out, and together they often add up to more than the redundancy amount itself. These are separate from redundancy pay — they are money you've already earned — but they all land in your final pay:
When your employer provides the final payment breakdown, ask for a line-by-line statement. You should see each component separately, not a single lump sum. This helps you check the numbers and also matters for tax.
This is where redundancy maths gets genuinely complicated, and it's also where you can lose a significant portion of the payout if you're not aware of the rules. For a genuine redundancy (one where the employer no longer needs anyone to do your job, and proper process has been followed), part of the payment is tax-free. For a non-genuine redundancy, the tax-free treatment does not apply.
For a genuine redundancy in the 2025–26 financial year, the tax-free amount is calculated as:
| Component | Amount |
|---|---|
| Base amount | $12,524 |
| Plus per completed year of service | $6,264 |
So someone with 10 completed years of continuous service would have a tax-free cap of $12,524 + (10 × $6,264) = $75,164. The first $75,164 of their genuine redundancy payment is received tax-free. Anything above that cap is treated as an Employment Termination Payment (ETP) and taxed differently.
The portion of your redundancy payment that exceeds the tax-free cap is an ETP. The tax rate on an ETP depends on your age and whether you're above or below the ETP cap ($245,000 for 2025–26, indexed annually):
There's also a "whole-of-income cap" that interacts with non-genuine redundancies and high incomes, which the ATO applies automatically when you lodge your return. The Redundancy Pay Calculator estimates the correct tax treatment across all of these scenarios.
The NES is the floor. Many Australian workers have entitlements above the NES minimum because they're covered by a modern award, an enterprise agreement, or a contract clause that is more generous. The "most beneficial provision" rule means you receive the highest applicable entitlement, not the lowest.
Here's a calm, thorough checklist. Work through these in order — most people get through it in under an hour.
Search the document for the words "redundancy" and "severance." If there's a clause that specifies a redundancy formula (for example, three weeks per year of service), that clause applies if it's more generous than the NES. Contract terms that are less generous than the NES don't apply — the NES still wins.
Modern awards are industry-specific instruments that set minimum conditions above the NES. The Fair Work Ombudsman maintains a free Award Finder tool at fairwork.gov.au. Search by industry and occupation to find which award (if any) covers your role. Some awards include redundancy provisions that go beyond the NES; others don't change it. The awards for manufacturing, clerks, hospitality, retail, and building and construction all have their own wrinkles.
Enterprise agreements (EAs) are negotiated between an employer and its employees (often through a union) and registered with the Fair Work Commission. If you have an EA, it may include redundancy terms that are more generous than both the NES and the modern award. The Fair Work Commission publishes all current EAs in a searchable public register at fwc.gov.au. Check whether your workplace has one — many larger employers in banking, public service, universities, mining and retail do.
If you're a union member, your union representative can tell you exactly which agreement applies and what entitlements you have under it. Unions negotiate EAs and usually have detailed knowledge of the specific terms for your workplace and industry.
A polite, direct question works: "Which modern award or enterprise agreement covers my role, and what does it say about redundancy pay?" Employers are required to provide this information. Many larger employers also have internal redundancy policies that can sit on top of the legislated minimum.
The Fair Work Ombudsman provides a free information service (13 13 94) and can tell you what your minimum legal entitlements are. They can't calculate specific EA or contract provisions for you, but they can confirm the NES baseline and point you to the right award.
For the tax-free threshold to apply, the redundancy has to be "genuine" in the ATO's sense. The three main tests are:
Situations that commonly fail the "genuine" test include: being offered a demoted role you refuse, reaching the end of a fixed-term contract, retiring voluntarily without a genuine redundancy trigger, or being 65 or over at the time of termination (which has its own rules). If your redundancy is non-genuine, the payment is taxed as an ordinary ETP with no tax-free component.
If the nature of the termination is unclear, the Fair Work Ombudsman or an employment lawyer can help clarify. This matters because the difference between genuine and non-genuine can be tens of thousands of dollars in tax.
Apply the NES scale to your years of service and weekly base pay. See the gross figure, tax-free component, ETP portion and net take-home.
Redundancy Pay Calculator → Pay & Tax Calculator →All figures are drawn from primary Australian government sources and are current for the 2025–26 financial year. The NES redundancy scale comes from the Fair Work Act 2009, administered by the Fair Work Ombudsman. The tax-free threshold for genuine redundancy ($12,524 base plus $6,264 per year of service) and the ETP cap ($245,000) come from the ATO and are indexed annually. Long service leave rules vary by state and territory and should be checked against your specific state's legislation.