Made Redundant in Australia? Your Financial Guide to Tax, Super, Centrelink & What’s Next

Being made redundant in Australia can feel like the ground has shifted underneath you. One moment, work is part of your routine. The next, you’re trying to understand a redundancy payout, tax, super, Centrelink, insurance, mortgage repayments, and what comes next – all while dealing with the shock of losing your role.

If you’re in your 50s or early 60s, the decision can feel even bigger. Do you look for another job? Take a break? Retire earlier than planned? Use the payout to clear debt? Add to super? Keep cash aside?

The good news is that redundancy in Australia has clearer financial rules than many people realise. This guide covers how your payout is taxed, whether super is paid, what happens to your insurance, Centrelink waiting periods, and how to make sensible decisions with your money – especially if you’re close to retirement.

At Pride Advice, this is where good financial advice can help. Redundancy is not just an employment issue. It can affect your tax, superannuation, personal insurance, Centrelink position, retirement plans and overall financial confidence.

What counts as a genuine redundancy?

A genuine redundancy generally happens when your employer no longer requires your roll to be fulfilled. That might happen because the business is restructuring, relocating, reducing costs, introducing new technology, closing part of the business, or changing workflow requirements.

A genuine redundancy is different from simply being dismissed, resigning, or leaving by mutual agreement. The distinction matters because genuine redundancy payments can receive special tax treatment.

In simple terms, a genuine redundancy usually means:

• Your role is no longer required
• the redundancy is not just a normal resignation or dismissal
• the relevant employment and consultation rules have been followed
• you are under Age Pension age at the time, unless another earlier compulsory retirement age applies

If you’re unsure whether your redundancy is genuine, check your paperwork carefully. Your employer should provide details of your final pay and the type of termination payment being made. You can also refer to the

For more, see the Australian Taxation Office’s guidance on genuine redundancy payments.

Genuine redundancy vs non-genuine redundancy: why it matters

Here’s the simple difference.

The key point: don’t assume every amount in your final pay is taxed the same way. Your final payment may include several components, each with different tax treatment.

How your redundancy payout is taxed

One of the most common questions people ask is:

“Is redundancy pay tax free in Australia?”

The answer is: some of it may be, if the payment qualifies as a genuine redundancy and it falls within the ATO tax-free limit.

The tax-free base amount and the per-year-of-service amount are set by the ATO and indexed each year, so the exact figures change annually.

Using the confirmed 2025–26 figures as a working example:

So the longer you’ve been with your employer, the larger your potential tax-free amount. The formula is:

Tax-free amount = $13,100 + ($6,552 × completed years of service)

Only completed years of service count.

Any amount above the tax-free limit is generally treated as an employment termination payment (ETP). That excess amount may still receive concessional tax treatment, but only up to certain caps.

For 2025–26, the ETP cap is $260,000. There is also a whole-of-income cap of $180,000, which can affect how much of a non-excluded ETP receives concessional tax treatment. Genuine redundancy ETPs are excluded from the whole-of-income cap, but non-genuine termination payments are not.

This is why timing matters. If you receive a redundancy payout in the same financial year as a full year of salary, the tax outcome can look very different from a year where you have less other taxable income.

Note: These figures are indexed by the ATO each year. Always check the current year’s amounts on the ATO website before making decisions.

Worked example: how the tax-free redundancy amount is calculated

Let’s say Alex is made genuinely redundant in the 2025–26 financial year after 10 completed years with the same employer. Alex receives a genuine redundancy payment of $95,000.

The tax-free amount is calculated as:

• Base amount: $13,100
• Service amount: $6,552 × 10 years = $65,520
• Total tax-free limit: $78,620

That means:

In this example, $78,620 may be tax-free. The remaining $16,380 would generally be treated as an ETP and taxed under the relevant ETP rules.

This is a simplified working example based on 2025–26 figures only. It doesn’t include unused leave, payment in lieu of notice, salary owed, Medicare levy, other income, or personal circumstances. The main takeaway is that the tax-free amount is not a guess – it’s calculated using a set formula that updates each year.

How is an Employment Termination Payment (ETP) taxed?

An employment termination payment, or ETP, is a lump sum payment connected to the end of your employment. An ETP may include:

• the taxable component of a genuine redundancy payment above the tax-free limit
• payments in lieu of notice
• severance payments
• invalidity payments

ETPs are taxed differently from ordinary salary and wages. The tax outcome depends on:

• your age
• whether you have reached preservation age
• the type of payment
• other taxable income you have in the same financial year
• whether the ETP cap or whole-of-income cap applies

This is an area where it’s worth getting advice before making assumptions. Many people focus only on the headline payout amount, but the after-tax amount is what really matters for your next steps.

Does income protection cover redundancy?

Usually, no.

Income protection insurance is generally designed to replace part of your income if you can’t work due to illness or injury. Standard income protection is not designed to cover ordinary redundancy or unemployment.

Some people may have separate consumer credit insurance, loan protection, or older-style policies that include involuntary unemployment or redundancy cover. But these policies often have strict definitions, waiting periods and limits.

If you’ve been made redundant, check:

• whether you have income protection through super
• whether you have cover outside super
• whether you hold loan protection or consumer credit insurance
• what the policy actually covers
• whether redundancy or involuntary unemployment is included
• what waiting periods apply
• what evidence is required to claim

This is an area where policy wording matters. Don’t rely on the name of the product. Read the terms carefully or ask an adviser to help you interpret them.

Is super paid on redundancy?

In most cases, superannuation guarantee is not paid on genuine redundancy payments because redundancy is not payment for ordinary hours worked. It’s compensation for the loss of your job.

However, your final pay may include other amounts where super could be treated differently, depending on the payment type and the rules that apply. Your final pay may include:

• ordinary wages still owed
• annual leave
• long service leave
• payment in lieu of notice
• bonus or commission payments
• allowances or other entitlements

Don’t assume the super treatment is the same for every line item.

A practical step is to ask your employer or payroll team for a breakdown of your final pay, including:

• what each payment represents
• how tax has been withheld
• whether any super has been paid
• whether the payment is classified as genuine redundancy, ETP, leave or wages

This is especially important if you’re close to retirement and trying to work out how much will be available as cash, how much is going into super, and what your short-term budget looks like.

Can you access your super after redundancy?

Being made redundant does not automatically mean you can access your super. This is one of the biggest misunderstandings people have after redundancy.

In Australia, access to super generally depends on whether you’ve met a condition of release. For most people, the key access points are:

• from age 60 if you retire, leave a job or utilise a transition to retirement income stream
• from age 65 whether you’re still working or not
• earlier in limited circumstances – severe financial hardship, compassionate grounds, permanent incapacity or terminal illness

So, if you’re made redundant at 45, you usually can’t simply access your super because you lost your job.

If you’re made redundant at 55, you may be close to retirement planning age, but you still may not be able to access super unless you meet a specific condition of release.

If you’re made redundant at 60 or over, the situation can be very different. If you leave an employment arrangement after reaching age 60, you may be able to access some or all of your super, depending on your circumstances.

This is where advice becomes important. Accessing super may provide flexibility, but it can also affect your retirement income, Centrelink position, tax outcomes and long-term financial security.

What Centrelink support may you qualify for after redundancy?

If you’re made redundant and don’t move straight into another role, you may be eligible to apply for Centrelink support, such as JobSeeker Payment. However, a redundancy payout can affect when payments start.

Services Australia may apply waiting periods, including:

• an ordinary waiting period
• an income maintenance period
• a liquid assets waiting period
• other waiting periods depending on your situation

An income maintenance period may apply if you receive a redundancy payment, leave payout, termination payment or other lump sum when your job ends. For example, if you receive a redundancy payment that represents 10 weeks of pay, you may have to wait 10 weeks before receiving income support, depending on how Services Australia assesses your situation.

A liquid assets waiting period may also apply if you or your partner have readily available money over certain limits. This can include savings and money owed by your employer.

The important point: you can still lodge a claim even if you haven’t received your final employer payment yet. Services Australia will assess your situation and tell you if you qualify, how much you may receive, and when payments may begin.

For full details on JobSeeker and waiting periods, see Services Australia’s JobSeeker Payment page.

Don’t leave Centrelink planning until the week your cash runs low. If you think you may need support, start the process early.

Made redundant at 55, 60 or later? What changes

Redundancy later in life is not just a job loss. It can become a retirement decision. If you’re made redundant in your 50s or early 60s, you may be asking:

• Do I need to find another full-time job?
• Could I work part-time instead?
• Can I retire earlier than planned?
• Should I use the payout to clear the mortgage?
• Should I put some of the money into super?
• How long can I fund my lifestyle without work?
• Will I qualify for Centrelink or Age Pension later?
• What happens to my insurance if I stop working?

This is where the strategy becomes more personal.

Made redundant at 55

At 55, you may still have several working years ahead. You may not yet be able to access super, depending on your date of birth and circumstances. The priority is usually cashflow planning:

• How long can the payout support you?
• How quickly do you need another role?
• Do you need to reduce expenses temporarily?
• Should you keep cash available rather than locking money away?
• What happens to insurance if your employment changes?

This may also be a good time to review whether your super investment option, insurance cover and retirement timeline still make sense.

Made redundant at 60

At 60, redundancy may open up more options. You may be able to access super if you meet a condition of release. But that doesn’t automatically mean you should draw on it straight away.

A good plan will consider:

• how much cash you need now
• whether you plan to return to work
• how long your super may need to last
• whether you should start a pension income stream
• whether you should keep money in accumulation phase
• how tax, Centrelink and future Age Pension eligibility may be affected

This is often where people benefit from modelling a few different pathways. For example:

• return to work full-time
• return to work part-time
• take a career break for 6 to 12 months
• retire now
• semi-retire and draw some income from super

The right answer isn’t always obvious until you compare the numbers.

Made redundant close to Age Pension age

If you’re approaching Age Pension age, redundancy planning can overlap with retirement income planning and Centrelink strategy. Important questions include:

• When can I apply for Age Pension?
• How will my assets and income affect eligibility?
• Should I spend from cash, super or investments first?
• How do I structure income in retirement?
• How long will my money last?
• What happens if aged care or health costs become part of the picture?

This is where redundancy can become a turning point. It may not be the transition you planned, but with good advice, it can become a structured pathway into the next stage.

See our related guides: Accessing the Age Pension is easier than you think  and  The vital role of aged care financial advice.

What should you do with your redundancy payout?

The worst time to make a rushed decision is when you’re stressed. A redundancy payout can feel like a large amount of money at first, but it may need to cover several purposes at once:

• immediate living costs
• mortgage or rent
• health insurance
• family expenses
• job search period
• training or career change
• tax
• super contributions
• retirement funding
• debt reduction
• emergency buffer

Before deciding what to do, separate the payout into “jobs”.

1. Short-term cash buffer

Keep enough aside for essential expenses while you work out your next step. This may include:

• mortgage or rent
• groceries
• utilities
• insurance premiums
• school fees
• transport
• medical costs
• minimum debt repayments

For many people, the first priority isn’t investing. It’s making sure the next few months are stable.

2. Debt management

If you have a mortgage, credit card debt or personal loans, redundancy may be a chance to reduce pressure. But be careful – paying down debt can be sensible, but you don’t want to leave yourself cash-poor if it takes longer than expected to find work.

Mortgage offset accounts can be useful because they may reduce interest while preserving access to cash, depending on your loan.

3. Superannuation

Putting some of your payout into super may be attractive, especially if you are behind on retirement savings or close to retirement. But super is usually locked away until you meet a condition of release, and contribution caps apply.

Before contributing, check:

• your concessional contribution cap
• your non-concessional contribution cap
• whether you have unused concessional cap amounts from prior years
• whether you may need the money before retirement
• whether it affects Centrelink or Age Pension planning
• whether the timing falls in the right financial year

4. Insurance

Redundancy is a good time to review insurance. Check:

• life insurance
• total and permanent disability cover
• income protection
• trauma cover
• insurance held through super
• whether premiums are sustainable while not working
• whether changing jobs affects group cover or salary continuance arrangements

Don’t cancel cover quickly just to save money without understanding what you may lose. If your health or occupation changes later, replacing cover may not be straightforward.

5. Career and lifestyle planning

Some people use redundancy to pivot:

• retrain
• consult
• reduce hours
• change industries
• start a business
• transition toward retirement

That can be positive, but it needs a financial plan behind it. The payout should support the transition, not disappear without a clear purpose.

What happens to your life insurance if you lose your job?

Losing your job doesn’t automatically cancel all insurance, but it can affect cover in several ways.

If your insurance is held through super, premiums may continue to be deducted from your super balance. That can keep cover in place, but it can also reduce your retirement savings over time.

If you stop receiving employer super contributions, you should check whether your super account could become inactive and whether that affects your insurance.

If you had employer-provided group cover, salary continuance or insurance linked to your employment, that cover may reduce or cease when your employment ends.

After redundancy, check:

• what cover you have
• where it is held
• how premiums are paid
• whether the cover continues if you are not working
• whether occupation or income changes affect eligibility
• whether you still need the same level of cover
• whether affordability is an issue

This is especially important for people with mortgages, dependants, business commitments or health concerns.

When should you get financial advice after redundancy?

You don’t need financial advice for every small decision after redundancy. But advice can be valuable when the decisions are connected.

Redundancy often brings together tax, super, Centrelink, insurance, debt and retirement planning. Looking at one part in isolation can lead to poor outcomes.

Consider getting advice if:

• your payout is significant
• you are unsure how the payment is taxed
• you are over 50
• you are close to retirement
• you have a mortgage
• you are considering putting money into super
• you may need Centrelink support
• you have insurance through super
• you are thinking about retiring earlier than planned
• you want to know how long your money may last
• you are deciding whether to work again, semi-retire or retire

A financial adviser can help you work through questions such as:

• What is the after-tax value of my payout?
• How much cash should I keep?
• Should I pay down debt?
• Should I contribute to super?
• Can I access super?
• What happens if I do not find work for 6 months?
• Can I afford to retire?
• What Centrelink issues should I understand?
• Is my insurance still appropriate?
• What is the best order to use cash, super and investments?

The goal isn’t to make one clever move. It’s to build a plan that gives you confidence and flexibility.

FAQs: Redundancy in Australia

Is redundancy pay tax free in Australia?

Part of a genuine redundancy payment may be tax-free up to the ATO limit. For 2025–26, the tax-free limit is $13,100 plus $6,552 for each completed year of service. These figures are indexed annually. Any amount above the limit is generally treated as an employment termination payment and taxed under ETP rules.

Is super paid on redundancy?

Generally, super guarantee is not paid on genuine redundancy payments because they are not ordinary earnings for work performed. However, your final pay may include other components such as wages, bonuses, leave or payment in lieu of notice, so it is important to check each line item.

How is a redundancy payout taxed in Australia?

A redundancy payout may include several components. The tax-free part of a genuine redundancy is calculated using the ATO formula (base amount plus a per-year-of-service amount). Amounts above the tax-free limit may be treated as an employment termination payment. Unused leave, salary, wages and other entitlements may be taxed separately.

Does income protection cover redundancy?

Standard income protection insurance usually covers inability to work due to illness or injury, not ordinary redundancy. Some separate loan protection or consumer credit insurance policies may include involuntary unemployment cover, but conditions, exclusions and waiting periods vary. Read the policy wording or ask an adviser to help you interpret it.

How long is the Centrelink waiting period after redundancy?

It depends on your circumstances and the amount you receive. Redundancy and leave payments can trigger an income maintenance period. Services Australia may also apply other waiting periods, including a liquid assets waiting period. You can submit a claim and Services Australia will assess when payments may start.

Can I access my super if I’ve been made redundant?

Redundancy alone doesn’t automatically allow early access to super. You generally need to meet a condition of release. You may be able to access super from age 60 if you leave a job or retire, or from age 65 whether you’re still working or not. Early access may be available in limited circumstances such as severe financial hardship or compassionate grounds.

What happens to my life insurance if I lose my job?

It depends on where your cover is held. Insurance inside super may continue while premiums are deducted from your super balance, but you should check whether your account remains active and whether cover conditions change. Employer-linked group cover may cease or change when employment ends.

Should I put my redundancy payout into super?

It may be appropriate for some people, especially if they are close to retirement and have enough cash available for short-term needs. But super contribution caps apply, and money contributed to super is usually locked away until you meet a condition of release. Get advice before contributing a large amount.

What should I do first after being made redundant in Australia?

Start by getting a clear breakdown of your final pay, understanding what is taxable and tax-free, setting aside cash for essential expenses, checking Centrelink options, reviewing insurance, and avoiding rushed decisions with the payout. Once the immediate pressure is managed, you can plan the next stage.

Should I get financial advice after redundancy?

If your redundancy payout is large, you are over 50, you are close to retirement, or you are unsure about tax, super, Centrelink or insurance, financial advice can help. A redundancy payout can affect several parts of your financial life at once, so it is worth making decisions with the full picture in mind.

A final note from me

Being made redundant is about much more than the payout.

It can affect your confidence, your routine, your plans and your sense of certainty about the future. While redundancy is rarely something people choose, it can also create an opportunity to stop, reassess and make informed decisions about what comes next.

The financial implications are different for everyone. Your redundancy payment may need to support you while you look for a new role, help reduce debt, contribute to your retirement plans, or simply provide some breathing space during a period of change. For many people, it’s a combination of all of these.

That’s why one of the most important things you can do is avoid making rushed decisions.

At Pride Advice, I work with clients to understand the broader financial impact of redundancy, including tax, superannuation, personal insurance, Centrelink considerations and retirement planning. My role is to help you make sense of your options so you can move forward with greater clarity, confidence and control.

If you’ve been made redundant, or you’re expecting a redundancy package, book a chat with me – a Pride Advice Senior Financial Adviser who specialises in personal insurance, redundancy, Centrelink and superannuation.

Disclaimer: General information only. Not personal advice. Tax, superannuation and Centrelink rules are complex and can change. Figures cited (including the 2025–26 genuine redundancy tax-free base amount and per-year-of-service amount) are indexed annually – always confirm the current year’s figures at ato.gov.au before making decisions. Consider your own circumstances and seek professional advice before making financial decisions