What Is Genuine Redundancy?
A genuine redundancy occurs when your position is no longer needed because of changes to the business — not because of anything you did. The ATO has a specific definition: your job must be genuinely redundant (not being filled by someone else), and your employer must have complied with any consultation obligations in your Modern Award or Enterprise Agreement.
This matters because genuine redundancy payments receive significant tax concessions that other termination payments do not.
💰 Calculate Your Redundancy Pay
Enter your years of service and weekly pay to see your NES entitlements, tax-free component, and estimated payout.
Redundancy Pay Calculator →Minimum Redundancy Pay — The NES Scale
The National Employment Standards (NES) set minimum redundancy pay entitlements based on years of continuous service. Your Award, Enterprise Agreement, or employment contract may provide more.
| Years of Continuous Service | Minimum Weeks' Pay |
|---|---|
| Less than 1 year | Nil |
| 1 year – 2 years | 4 weeks |
| 2 years – 3 years | 6 weeks |
| 3 years – 4 years | 7 weeks |
| 4 years – 5 years | 8 weeks |
| 5 years – 6 years | 10 weeks |
| 6 years – 7 years | 11 weeks |
| 7 years – 8 years | 13 weeks |
| 8 years – 9 years | 14 weeks |
| 9 years – 10 years | 16 weeks |
| 10 years or more | 12 weeks |
Note: Businesses with fewer than 15 employees are exempt from the NES redundancy pay requirements (though you may still be entitled to notice period and leave payouts).
Tax-Free Component 2025–26
This is one of the most valuable features of genuine redundancy — a portion of your payment is completely tax-free. For 2025–26, the tax-free amounts are:
- Base amount: $12,524
- Plus per completed year of service: $6,264
Example: If you've worked for 8 completed years, your tax-free cap is: $12,524 + (8 × $6,264) = $12,524 + $50,112 = $62,636 tax-free.
If your redundancy payment is less than this cap, the entire payment is tax-free!
Tax on the Remaining Amount
If your redundancy payment exceeds your tax-free cap, the excess is taxed as an Employment Termination Payment (ETP) at a maximum rate of 32% (including Medicare levy), which is lower than the top marginal rate of 47%. This is still a significant concession for high earners.
What Else Are You Entitled To?
Notice Period
Under the NES, you are entitled to a minimum notice period based on your years of service:
| Years of Service | Minimum Notice |
|---|---|
| Less than 1 year | 1 week |
| 1–3 years | 2 weeks |
| 3–5 years | 3 weeks |
| 5 years or more | 4 weeks |
Over 45 years old with 2+ years service: Add 1 additional week to the above notice periods.
Your employer can pay you notice in lieu (a lump sum instead of working the notice period). This payment is taxed as normal income.
Annual Leave Payout
All accrued but untaken annual leave must be paid out on termination. This is taxed as normal income (not as an ETP).
Long Service Leave
If you have accrued long service leave, this must be paid out. Tax treatment depends on when the leave was accrued.
What to Do With Your Redundancy Payout
- Don't panic-spend — Take time before making major financial decisions with a large lump sum.
- Understand your Centrelink waiting period — If you receive a redundancy payment, Centrelink imposes a "liquid assets waiting period" before you can receive JobSeeker. This can be up to 13 weeks depending on the amount received.
- Consider topping up super — If you have room under the $120,000 non-concessional cap, contributing to super can be tax-effective.
- Pay down high-interest debt — Credit cards and personal loans should be prioritised.
- See a financial adviser — A redundancy payout can be a rare opportunity to significantly improve your financial position with proper planning.