Understanding your redundancy rights

Why this matters before you sign

I've signed two redundancy deeds in my working life. The first one I signed within 48 hours because I wanted the cheque and the closure. The second one I held for nine days, got a lawyer to mark it up, and walked away with around eighteen thousand more and no restraint of trade. Same kind of role, same kind of company, completely different outcome.

The difference was knowing what I was actually entitled to before they told me what they were offering.

The Australian floor (NES)

The National Employment Standards set the legal minimum for redundancy pay in most industries. Roughly:

• 1 to 2 years: 4 weeks
• 2 to 3 years: 6 weeks
• 3 to 4 years: 7 weeks
• 4 to 5 years: 8 weeks
• 5 to 6 years: 10 weeks
• 6 to 7 years: 11 weeks
• 7 to 8 years: 13 weeks
• 8 to 9 years: 14 weeks
• 9 to 10 years: 16 weeks
• 10+ years: 12 weeks (yes, it drops, because long service leave kicks in)

Small business employers (under 15 staff) are exempt from the NES redundancy scale. Some awards and enterprise agreements pay more than the NES floor. Check yours before you start negotiating.

Notice on top of redundancy

Notice is a separate thing. NES notice is one to five weeks depending on age and tenure. Your contract usually overrides upward (senior roles often get four to twelve weeks). They can either make you work it out, put you on garden leave, or pay it in lieu. Pay-in-lieu is the most common in tech.

Important: notice and redundancy stack. They are not the same payment. If anyone tells you otherwise, get the letter and read it twice.

Long service leave (the forgotten one)

State-based, varies by jurisdiction. In most states you accrue from day one but only get paid out at termination after seven to ten years of continuous service (some states are kinder). If you're at six and a half years and they're letting you go in March, you can sometimes negotiate to push the exit date past the seven-year mark. I've seen it work. I've seen it refused. Cost of asking: zero.

Tax treatment

Genuine redundancy payments get concessional tax treatment. The tax-free portion is a base amount plus a per-year-of-service amount, both indexed each financial year. Above the cap it gets taxed as an ETP (employment termination payment) at concessional rates up to a cap, then marginal above that.

I'm not going to quote the exact thresholds because they move every July. The rule of thumb: a few years of service plus a redundancy in the high-five-figures is usually entirely tax-free. A senior role with ten-plus years and a six-figure package will straddle the cap.

Get a tax agent to model it before you sign. One hour of their time saves four-figure mistakes.

Things to negotiate that aren't money

The cheque is the obvious lever. These are the quieter ones:

• Exit date (push it for long service leave, super contributions, or to bridge a school holiday)
• Outplacement support (often six to twelve weeks, can be cashed out or extended)
• Retention of equipment (the laptop is worth a grand to them, four grand to you)
• Reference and announcement wording (you write the LinkedIn line, they approve it)
• Restraint of trade (often boilerplate, often unenforceable, often removable by asking)
• Confidentiality carve-outs (so you can describe the role to recruiters)
• Continuation of benefits (private health, salary sacrifice arrangements)
• Unvested equity treatment (RSUs, options, LTI plans)

Each of these is a line item in their template. None of them get fixed unless you ask.

The deed of release

The legal document they want you to sign. Standard contents:

• You agree to the package
• You release them from any future claims (unfair dismissal, general protections, discrimination)
• You agree to confidentiality about the terms
• Sometimes a non-disparagement clause
• Sometimes a restraint of trade

Read every clause. Cross out the ones you won't accept and send it back. They'll often agree to most edits because the alternative is you not signing, which means they can't close the books on the role.

When to call Fair Work or a lawyer

Call Fair Work Commission if:

• You think the redundancy isn't genuine (the role is being backfilled within months)
• You weren't consulted as required by the modern award or your EBA
• The selection process discriminated on a protected attribute
• The payment is below the NES minimum

Call an employment lawyer if:

• The package is six figures
• There's a restraint of trade longer than six months
• You have unvested equity
• You're a senior role with a complex contract
• Anything in the deed makes you uncomfortable

The fee is small. The downside of not calling is large.

What I'd tell my younger self

Don't be grateful. Be polite, be professional, be measured, but don't be grateful. They're not doing you a favour. They're closing a role and need you to leave cleanly. The package is the price of clean.

Slow down. Read everything. Negotiate once.