How to Survive Being Made Redundant
The first week of a redundancy is a logistics problem wearing an emotional costume. There are numbers to check, forms to lodge, and a small number of decisions that are much cheaper if you make them in the first few days than in the third week.
Do the logistics first. The emotional part is real and it is coming, and it is much easier to handle from a position where the money is mapped and the paperwork is lodged.
The 10-minute version
- Check the arithmetic before you sign anything. Redundancy pay runs on a legislated scale in weeks of service, plus notice, plus accrued leave. Errors are common and usually in the employer’s favour.
- Lodge with Centrelink immediately, even if you think you will not qualify or will get a job quickly. Processing takes time and a redundancy payment may create a waiting period — but the clock starts from when you claim.
- Do not sign a deed on the day. Take it away, read it, and get advice if there is a release, a restraint, or a confidentiality clause in it.
The numbers
Redundancy pay under the National Employment Standards runs on a scale by continuous service:
| Continuous service | Redundancy pay |
|---|---|
| 1 to less than 2 years | 4 weeks |
| 2 to less than 3 years | 6 weeks |
| 3 to less than 4 years | 7 weeks |
| 4 to less than 5 years | 8 weeks |
| 5 to less than 6 years | 10 weeks |
| … rising to a maximum of | 16 weeks |
| 10+ years | drops back to 12 weeks |
That drop at ten years surprises people. It exists because long service leave entitlements generally begin around that point.
Notice of termination is separate: one to four weeks depending on service, plus an extra week if you are over 45 with at least two years of service. Notice is either worked or paid out.
Small business exemption: an employer with fewer than 15 employees at the time notice is given is generally exempt from redundancy pay — though notice and accrued leave still apply.
Also owed: accrued annual leave, any accrued long service leave depending on your state and service, and outstanding wages. Your award or enterprise agreement may provide more than the NES minimum, so check it rather than assuming the legislated floor is the answer.
The first 72 hours
1. Get it in writing. The reason for termination, the last day, the payment breakdown, and who to contact. A verbal conversation is not a record.
2. Check the payment breakdown line by line. Notice, redundancy weeks, annual leave, long service leave, superannuation. Compare against the scale above and your award. If something looks wrong, ask in writing — most errors are administrative rather than malicious.
3. Do not sign a deed of release on the spot. Employers often present one alongside the final payment. It may contain a release of claims, a non-disparagement clause, or a restraint on future work. Take it home. Read it. Get advice if it is more than a page.
4. Lodge with Centrelink today. A redundancy payment can create an income maintenance period before payments begin, but that period is calculated from when you claim, so claiming late simply delays money. Use myGov, and expect to need identity documents and the employment separation certificate.
5. Work out your runway. Total available money divided by monthly essential spend. That single number converts anxiety into a planning horizon, and it is usually longer than it feels.
6. Cancel or pause the discretionary spend while you know the number. Subscriptions, direct debits, anything annual coming up.
7. Ask for a reference in writing, now, while people still feel bad and still work there. In six months your manager may have moved on.
Money triage, in order
Do not pay down debt with the redundancy payment on day one. Liquidity matters more than interest while you are unemployed. Cash in an offset or savings account gives you options; extra principal paid off a mortgage does not.
Do call every provider before you miss anything. Utilities are required to offer hardship programs. Banks have hardship teams. Councils will negotiate on rates. Telcos will pause plans. All of them are dramatically more helpful before a missed payment than after — full detail in How to Survive a Bill You Can’t Pay.
Do check your insurances. Some income protection and loan policies include involuntary unemployment cover. People pay for this for years and never claim it.
Do keep your super where it is. Withdrawing early is rarely available and almost never a good idea.
Free, independent help exists: the National Debt Helpline (1800 007 007) is free financial counselling, not a sales channel. It is one of the most under-used services in the country.
The tax detail worth knowing
A genuine redundancy payment has a tax-free component up to a limit based on years of service, with the balance taxed as an employment termination payment. The distinction between a “genuine redundancy” and a resignation or dismissal matters for how it is taxed, so make sure the paperwork describes it accurately.
This is worth twenty minutes with the ATO’s guidance or an accountant, because the amounts involved are usually material and a mislabelled payment costs real money.
What actually goes wrong
Signing on the day. The single most common expensive mistake.
Not checking the arithmetic. Missed years of service, forgotten long service leave, notice not paid.
Centrelink claimed late, delaying money for no reason.
The redundancy payment is used to clear debt immediately, leaving no liquidity for a job search that takes four months.
Nobody asks for a written reference while goodwill is at its peak.
The job search starts at week three, after two weeks of shock. Understandable — and the first week is when your network is most responsive to the news.
Nothing gets told to the household. Money stress plus secrecy is much worse than money stress.
LinkedIn and the résumé are left stale, then updated in a hurry under pressure.
Thresholds
| Situation | The rule |
|---|---|
| The conversation happens | Ask for everything in writing before you leave the room |
| A deed or release is presented | Never sign the same day. Read it, get advice |
| Payment breakdown | Check against the NES scale, notice rules and your award |
| Centrelink | Claim the same week, regardless of what you expect to qualify for |
| Any bill you might miss | Ring before the due date and ask for hardship terms |
| The redundancy payment | Keep it liquid until you have income again |
| A written reference | Ask in the first week |
| Something looks wrong | Fair Work Ombudsman first, then a union or community legal centre |
What it costs
| Tier | Spend | What it buys |
|---|---|---|
| Free | $0 | Fair Work Ombudsman advice, National Debt Helpline financial counselling, Centrelink, your union if you are a member, community legal centres |
| Worth paying for | $200–500 | An employment lawyer to read a deed of release, if it contains a restraint or a substantial release. Usually a fixed fee for a review |
| Worth paying for | $150–400 | An accountant, to check the tax treatment of a genuine redundancy payment |
| Free but overlooked | $0 | Your own insurance policies. Check for involuntary unemployment cover before assuming you have none |
The drill: the first-week checklist
- ☐ Everything in writing: reason, last day, payment breakdown
- ☐ Payment checked against the redundancy scale, notice rules and your award
- ☐ Deed of release taken away unsigned, read, advice sought if needed
- ☐ Centrelink claim lodged via myGov
- ☐ Employment separation certificate requested from the employer
- ☐ Runway calculated: available money ÷ monthly essentials
- ☐ Every provider rung about hardship terms before anything is due
- ☐ Insurance policies checked for involuntary unemployment cover
- ☐ Written reference requested
- ☐ Household told, with the runway number, not just the news
- ☐ Résumé and LinkedIn updated while the detail is fresh
- ☐ Told your network — the first week is when people respond fastest
Frequently asked questions
How much redundancy pay am I entitled to in Australia?
The National Employment Standards scale runs from four weeks at one year of service to a maximum of sixteen weeks, dropping back to twelve weeks at ten or more years. Notice of termination is separate — one to four weeks, plus an extra week if you are over 45 with at least two years of service. Your award or agreement may provide more.
Do small businesses have to pay redundancy?
An employer with fewer than 15 employees at the time notice is given is generally exempt from redundancy pay, though notice and accrued leave still apply.
Should I sign the deed of release they gave me?
Not on the day. Take it away and read it. If it contains a release of claims, a restraint on future work, or a confidentiality clause, get advice before signing — a fixed-fee review is cheap relative to what you may be giving up.
When should I claim Centrelink?
The same week, even if you expect to find work quickly or think you will not qualify. A redundancy payment can create a waiting period, but it is calculated from when you claim, so claiming late only delays money.
Should I use the payment to pay off debt?
Not immediately. Liquidity matters more than interest while you have no income. Keep it accessible, ring your providers about hardship terms, and revisit debt once you are earning again.
Where can I get free help?
The Fair Work Ombudsman for entitlements, the National Debt Helpline on 1800 007 007 for free financial counselling, your union if you are a member, and community legal centres for employment advice.