Last updated 15 October 2026

Redundancy is one of the harder stretches most careers include. There’s often a payment that needs decisions, a job question without a clean timeline, and no shortage of advice from people who mean well but don’t know the whole situation.

What we’ve seen with clients going through it is that the ones who come out best financially aren’t the people who move fastest. They’re the ones who give themselves time to think clearly before they make the big moves. The first few weeks are mostly about buying yourself that space, not about ticking things off a list.

What follows is a measured walk through the decisions that generally matter in the first six months after a redundancy, and roughly the order they come up in.

Before you touch the lump sum, buy yourself time

The simplest and most protective first move is to move the redundancy payment into a separate account, not your day-to-day transaction account. A high-interest savings account, an offset account against the mortgage, or just a second everyday account you don’t touch, is enough.

The reason is practical. Once a redundancy payment blends into your main account, it stops feeling like a lump sum and starts feeling like income, which it isn’t. Keeping it visibly separate protects your decisions and gives you clear sight of how many months of runway you actually have.

That number, how many months the money would stretch at your current spending, is the first useful piece of information in the whole process. Everything else gets easier once you know it.

Understanding what you actually received

A redundancy payment usually isn’t one lump sum. It’s typically made up of three different buckets, each taxed differently.

• A genuine redundancy tax-free component. In 2026-27 this is a base amount plus an additional amount for every year of completed service. The full tax-free component sits in your account with no tax taken out.
• An Employment Termination Payment, often shortened to ETP. The rest of the payment (within caps) is taxed at concessional rates, which are lower than your marginal rate. The exact concession depends on whether you’ve reached preservation age, which is the age at which you can start accessing your super (currently 60 for most Australians).
• Unused leave payouts. Annual leave and long service leave are taxed under their own rules. These often sit at your marginal rate, or close to it, and aren’t part of the ETP concession.

You don’t need to work this out yourself. Your payment summary should break it down, and if you work with an accountant or planner, understanding the mix is the starting point for most tax decisions that follow. The main thing to know going in is that it isn’t a single number. The tax treatment of each bucket is different and matters for what you do next.

Insurance that may change when you leave

This is the piece that catches people out most. A few insurance arrangements you may have taken for granted while employed won’t automatically continue once you leave.

• Default life, TPD (Total and Permanent Disability) and sometimes income protection cover inside your super. These usually continue for a limited period after you stop contributing. There are specific rules about when cover lapses, typically if the account doesn’t receive a contribution for sixteen months, but the window closes faster than most people realise.
• Employer-paid insurance held outside super. Private health cover, group income protection, or life cover arranged by the employer may stop, or convert to a personally-paid policy at a different premium.
• Salary continuance built into some super funds. The eligibility rules for making a claim often rely on you being employed when the condition arose, so a claim lodged after redundancy can be more complicated.

The practical message: don’t cancel anything in the first few weeks. Insurance gaps are much harder to close later than to keep open. If you’re not sure what you have, a one-page summary of your current cover (and when it would lapse) is a reasonable thing to request from your super fund or planner before any changes are made.

Super: what to do first and what can wait

A lot of the super-related moves people reach for in the first week don’t actually need to happen that fast.

• Consolidating multiple super accounts can wait. It’s rarely urgent, and worth doing deliberately rather than quickly.
• Changing investment option can wait. Switching to cash when markets are moving tends to lock in losses.
• Contributing the lump sum into super can wait, and in some cases is a strong move once the tax position is clear. But it’s not a decision for your first fortnight.

The one super-related step that shouldn’t wait is notifying your fund of your employment ending. This affects your insurance status, and in some cases you have a window (often sixty days) to apply for continuation cover on more favourable terms.

Income support options worth knowing about

A few things that might be available depending on your circumstances:

• JobSeeker payment. There’s generally a waiting period for people with significant savings, called the liquid assets waiting period. Your redundancy payment counts as liquid assets, which can delay the start date. Once you qualify, the payment is also means-tested on an ongoing basis.
• Family Tax Benefit may need re-estimating if your household income is dropping.
• Mortgage repayment pauses. Most lenders will discuss short-term hardship arrangements if you reach out early, proactively, not when you’re already behind.
• Health insurance. Check whether your extras cover changes if you move from a corporate plan to an individual one.

None of these are decisions to rush. But knowing they exist is useful when you’re mapping out the next six months.

The partner or family conversation

If you have a partner or family, the single most useful thing we see work in the first fortnight is a specific, written conversation about numbers. Not vibes, numbers.

What you’re spending each month, what you have in the bank, what the runway looks like at the current rate, and what you’d each want to agree on if it took three, six or nine months to land the next thing. Those agreements don’t need to be rigid, but having them in writing stops small anxieties becoming large arguments six weeks in.

This is also often the right moment to update your Will, your Enduring Power of Attorney and your super beneficiary nominations if they haven’t been looked at in a while. Not because of the redundancy itself, but because a window has opened to deal with the admin that nobody ever quite gets around to.

Things that are actually worth doing in the first fortnight

• Move the redundancy payment into a separate account.
• Get a clear number for monthly spending and work out your runway.
• Request a one-page summary of all current insurance cover, and don’t cancel anything.
• Notify your super fund of your employment ending (for insurance purposes).
• Have the honest numbers conversation with your partner.
• Hold off on all the big money moves, like contributing the lump sum into super, consolidating accounts, buying investments, until you have the tax picture and the runway picture clear.

A quiet note on the emotional side

A redundancy carries weight beyond money. Even when a payment lands softly, there’s a loss of routine, identity, and often of professional relationships that mattered. Not everyone acknowledges that in their financial advice, and we think it’s worth saying out loud.

Big financial decisions made inside the first grief-and-anger period often don’t age well. If something can wait a month, it probably should. The people who come out of a redundancy best financially are usually the ones who gave themselves time to think clearly before they made moves.

When to get a planner involved

There isn’t a single right time, but a few sensible moments:

• Within the first few weeks, if the redundancy was significant and you want to understand the tax treatment properly before any decisions.
• Before you contribute any part of the lump sum into super.
• Before you cancel or change any insurance.
• If the redundancy comes within a few years of your planned retirement date. The strategy conversation becomes considerably more interesting at that point.

We’re not in a rush. If you’d like a measured conversation about how the pieces fit together, we’re here.

Book an initial chat with the Insight Wealth Planning team →

Related reading: Your Three-Minute Financial Planning Check-Up, Is It Time for a Super Review? and life and income insurance.

Frequently asked questions

How is a redundancy payment taxed in Australia?

A genuine redundancy payment is split into three main parts: a tax-free component (a base amount plus an additional amount for each year of completed service), the Employment Termination Payment taxed at concessional rates up to a cap, and unused leave payouts taxed under separate rules. The exact figures depend on your age, length of service, and whether the redundancy meets the ATO’s definition of genuine redundancy.

Can I put the lump sum into super?

Often, yes, but it depends on your contribution caps, the components of the payment, and your overall position. For some people it’s a tax-efficient move. For others it ties up money they’ll need for cash flow. It isn’t a decision to rush in the first fortnight.

Do I lose my income protection insurance when I leave?

Not immediately. Default cover held inside super typically continues for a limited period if your account doesn’t receive a contribution. Standalone policies continue as long as you keep paying the premiums. The important move is to check what you have and what the end dates look like before you cancel anything.

When should I apply for JobSeeker?

You can apply as soon as you’ve stopped work, but there’s generally a waiting period if you have meaningful savings. The waiting period is based on your liquid assets, which includes your redundancy payment, and can push back the start date. Applying early (even with a waiting period attached) means you’re in the queue when you become eligible.

What’s a reasonable timeframe to find the next job?

There’s no one answer, but a planning rule of thumb we often use is six months as a baseline, with contingency for twelve. The point isn’t that it will take that long. It’s that building the runway to allow for it stops you taking the first thing that comes along just to end the uncertainty, when the better fit might arrive in month four.

General advice warning: the information in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Redundancy tax rules, Centrelink eligibility and super contribution caps vary and may change. Please consider whether this information is appropriate for you before acting on it, and seek personal financial advice where required. Insight Wealth Planning Pty Ltd is a Corporate Authorised Representative of GPS Wealth Ltd, ABN 17 005 482 726, AFSL 254544.