What is genuine redundancy?
A genuine redundancy occurs when an employer no longer requires a particular job to be performed by anyone, due to changes in operational requirements — such as restructuring, automation, outsourcing, or business closure. Under the Fair Work Act 2009, a redundancy is genuine if the employer has followed any applicable consultation obligations in a modern award or enterprise agreement and has genuinely considered redeployment within the business or an associated entity.
A sham redundancy — where the role is filled again shortly after, or the process is used to dismiss a poorly performing employee — does not qualify as genuine redundancy and can expose the employer to unfair dismissal claims. If you believe your redundancy is not genuine, you can apply to the Fair Work Commission within 21 days of dismissal.
NES minimum redundancy entitlements
The National Employment Standards set out minimum redundancy pay based on completed years of continuous service. These amounts apply to most employees other than those in small businesses (under 15 employees) and casuals.
| Years of service | Weeks of pay |
|---|---|
| 1–2 years | 4 weeks |
| 2–3 years | 6 weeks |
| 3–4 years | 7 weeks |
| 4–5 years | 8 weeks |
| 5–6 years | 10 weeks |
| 6–7 years | 11 weeks |
| 7–8 years | 13 weeks |
| 8–9 years | 14 weeks |
| 9–10 years | 16 weeks |
| 10+ years | 12 weeks |
Note: entitlement drops to 12 weeks at 10+ years due to a step-down in the NES schedule.
The tax-free redundancy amount
For the 2025–26 financial year, the base tax-free limit for a genuine redundancy payment is $12,510, plus $6,255 for each completed year of service. This means an employee with 5 years of service could receive up to $44,785 tax-free. Amounts above the tax-free threshold are classified as an Employment Termination Payment (ETP) and are taxed at a maximum rate of 32% (including Medicare levy) for the amount within the ETP cap ($235,000 for 2025–26), rather than being added to your ordinary income.
Notice of termination
In addition to redundancy pay, you are entitled to notice of termination (or payment in lieu). NES minimum notice periods range from 1 week (less than 1 year service) to 4 weeks (5+ years of service), with an additional week for employees over 45 who have at least 2 years of continuous service. Notice pay is taxed as ordinary income and is separate from the redundancy payment. Ensure both components are included in your total entitlement calculation.