Redundancy Checklist Australia: What to Do From Day One

A genuine redundancy has a specific legal meaning under the Fair Work Act. It must be a real elimination of the role, with proper consultation, and redeployment must not have been reasonable. Only a genuine redundancy qualifies for the tax-free threshold on your payout. Getting this confirmed in writing protects you if the characterisation is later disputed.

The National Employment Standards set a minimum redundancy pay scale based on continuous years of service, but your award or enterprise agreement may be more generous. Some small businesses with fewer than 15 employees are exempt from the NES redundancy pay provisions entirely. Knowing which instrument applies tells you the floor you are entitled to before any negotiation.

You are entitled to either work your notice period or receive payment in lieu. Payment in lieu of notice is taxed as ordinary income, not as a genuine redundancy payment, so it does not attract the tax-free threshold. Knowing which applies affects your cash flow and your tax position for the year.

A redundancy payout typically combines several legally distinct components: the genuine redundancy payment, accrued annual leave, long service leave, and possibly payment in lieu of notice. Each component is taxed differently. You need the breakdown itemised before your final pay is processed so you can check the withholding is correct.

The NES scale starts at 4 weeks pay for 1 to 2 years of service and peaks at 16 weeks for 9 to 10 years. It then drops to 12 weeks for 10 or more years, because long service leave entitlements are assumed to apply at that point. This drop is counter-intuitive and catches people out. Use your continuous service start date and check the Fair Work Ombudsman's current scale to confirm the figure that applies to you.

Accrued annual leave paid out on termination is taxed as ordinary income at your marginal rate, including Medicare levy. It is not part of the genuine redundancy payment and does not benefit from the tax-free threshold. If you have significant accrued leave, this can push you into a higher bracket for the year. Check the calculation against your leave balance records.

Long service leave entitlements and their payout rules vary by state and territory, not by the NES. In some jurisdictions you accrue a pro-rata entitlement after a shorter qualifying period. Like annual leave, the payout is taxed as ordinary income, not as a genuine redundancy payment. Use the long service leave calculator to estimate what you may be owed.

The ATO sets a tax-free amount each financial year consisting of a base amount plus a per-year-of-service amount. The portion above that limit is taxed as an employment termination payment at concessional rates, subject to the ETP cap. Both the base amount and the per-year-of-service amount are indexed annually, so check the ATO website for the current 2026-27 figures before assuming any number you have seen elsewhere is still correct.

Employers sometimes apply a flat withholding rate across the whole payout rather than taxing each component correctly. If the genuine redundancy portion has been under-withheld or over-withheld, you will need to address it at tax time. Checking now means you can raise an error with payroll before the payment is finalised rather than waiting until your tax return.

Setting up myGov takes time, and identity verification can cause delays. If you wait until you are already under financial pressure, a technical hold-up costs you days of potential payment. Linking Centrelink to myGov is also required to manage your claim and report income online.

Services Australia sets your claim start date as the date you lodge, not the date you are eventually paid. If a liquid assets waiting period applies, it runs from your claim date. Lodging early means the waiting period starts and ends sooner. Delaying your claim by even a week delays your first payment by the same amount.

If your liquid assets, including your redundancy payout, exceed the threshold set by Services Australia, you must wait before JobSeeker payments begin. The threshold and maximum waiting period are set by Services Australia and can change. The waiting period can be several weeks. Check the current thresholds on the Services Australia website when you lodge, because the figures are indexed.

If you are in severe financial hardship and cannot meet the liquid assets waiting period, you may be eligible for a crisis payment or special benefit. These are not automatic and require a separate application. Eligibility depends on your circumstances, not just your income, so it is worth checking even if you think you will not qualify.

Many super funds include income protection insurance, and some policies include an involuntary unemployment benefit. However, standard income protection does not cover redundancy. Check your policy document specifically for involuntary unemployment cover, note any waiting periods and benefit caps, and confirm whether cover continues after you leave your employer or whether it lapses.

When you leave an employer, your super does not automatically move. Check that your current fund has your correct contact details so you continue to receive statements. If you have worked multiple jobs, you may have super in old funds. Consolidating before you are unemployed is easier because you have payslips and employment records on hand.

Some employer-provided insurance policies, including life insurance and income protection held outside super, are tied to your employment and cancel on your last day. If you want to continue that cover, you may have a short window to convert the policy to a personal policy without a new medical assessment. Check your policy terms immediately.

A bare-bones budget covers only essential expenses: rent or mortgage, utilities, food, and minimum debt repayments. Knowing your minimum monthly outgoing tells you exactly how long your payout will last and whether you need to act on any of the steps below before that runway runs out.

Banks are required to have hardship assistance programs, and many will offer a repayment pause or reduced payments for customers who contact them proactively. Waiting until you miss a payment limits your options and can affect your credit file. A conversation now, before you are in arrears, gives you more leverage.

If you carry credit card or personal loan debt, the interest compounds whether you are employed or not. Use the debt payoff calculator to model whether making larger payments from your payout now saves more than keeping that cash as a buffer. The answer depends on your interest rate and how long you expect to be out of work.

If you were employed for only part of the year, your effective tax rate for the year will be lower than the withholding rate applied to your payout. This often means a refund is due. Lodging promptly after 1 July means you receive any refund sooner, which matters when cash flow is tight.