Being offered a voluntary redundancy can be very overwhelming and can feel like you have to make a lot of important decisions all at once. For some, it might be welcome news, or it might have caught you completely off guard. Either way, what you do in the next few weeks can make a real difference to your financial future.
First, understand what type of redundancy you’re being offered
Not all redundancies are created equal, being clear on what applies to you matters because it affects how much tax you’ll pay.
A genuine redundancy happens when your role is no longer needed due to operational or structural changes, and your agency has met its consultation obligations under the Public Service Act. Payments made as part of a genuine redundancy receive favourable tax treatment, with a portion potentially tax-free depending on how long you’ve worked in the APS.
A non-genuine redundancy is where the role isn’t truly being removed, or where the proper process hasn’t been followed. Payments here are typically taxed as ordinary income, so the difference in what you take home can be significant.
If you’re unsure which applies to your situation, it’s worth getting clarity before you sign anything.
What will you actually receive?
APS redundancy packages typically include a few different components, each taxed differently.
Severance payment: for genuine redundancies, this is where the tax benefit sits. Under current ATO rules, a tax-free threshold applies based on your length of service. The portion above the threshold is taxed at a concessional rate (rather than your marginal rate), so longer-serving employees often see a meaningful benefit here.
Payment in lieu of notice: if your agency isn’t requiring you to work out your notice period, this payment is generally taxed at your marginal rate.
Leave payouts: any accrued annual leave and long service leave you haven’t taken gets paid out. Annual leave is taxed at a set rate, while long service leave has its own rules depending on when it was accrued.
Getting a clear picture of each component, and the likely tax on each, will help you understand exactly what you’re working with.
The APS exclusion period: what it is and why it matters
One thing that catches many APS employees off guard is the re-engagement restriction. If you accept a voluntary redundancy, there’s typically a period during which you can’t be re-employed in the Australian Public Service. This period varies depending on your separation terms.
This has a practical impact on your planning: you may be without APS income for longer than you expect, particularly if your plan was to return to a different agency or team. It’s worth factoring this into how you manage your funds and budget in the months ahead.
One thing that catches many APS employees off guard is the re-engagement restriction. If you accept a voluntary redundancy, there’s typically a period during which you can’t be re-employed in the Australian Public Service. This period varies depending on your separation terms.
This has a practical impact on your planning: you may be without APS income for longer than you expect, particularly if your plan was to return to a different agency or team. It’s worth factoring this into how you manage your funds and budget in the months ahead.
What should you do with the money?
This is where the real planning starts, and where the decisions you make early can either protect or undermine what you’ve received.
Cover your immediate needs first. Before anything else, work out how long your payout needs to last. Map your current monthly expenses, consider whether any income will continue (a partner’s salary, freelance work, investment returns), and give yourself a realistic buffer. The APS exclusion period means your next role might not start straight away or may start at a lower base salary.
Should you pay off debt? For high-interest debt like personal loans or credit cards, paying this down usually makes clear financial sense. For home loan debt, it’s a more nuanced conversation with the maths around offset accounts, redraw, and interest rates all needing to be considered.
Should you top up your super? This is one of the most common questions we hear, and for good reason. Depending on your age, income and contribution history, making a concessional or non-concessional super contribution can reduce the taxable portion of your payout while building your long-term position. There are annual caps to be aware of, as well as carry-forward rules that may work in your favour.
Should you invest the rest? If there’s a surplus after covering short-term needs and addressing debt or super, an investment portfolio could be a sensible home for those funds. However, this really depends on your timeframe, risk tolerance and other financial goals.
This is a big decision, consider getting some help
A voluntary redundancy in the APS is rarely a simple transaction. The interplay of tax, super, debt, cash flow and re-employment timing means the decisions you make in the first few months genuinely matter.
Getting professional guidance during this period can help you understand your options. Many APS departments also offer a one-off reimbursement to cover the cost of an initial financial advice consultation, so it may cost less than you expect to get some expert input.
At Green Associates, we work with Canberra professionals navigating exactly this kind of transition. We can help you understand what your after-tax payout actually means, model your options, and put a plan in place that gives you confidence about what comes next.
If you’d like to talk to someone about your options, book an initial conversation with our team.
This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs. Consider your financial situation and needs before making any decisions based on this information.
FAQs
What is voluntary redundancy in the APS?
Voluntary redundancy in the Australian Public Service (APS) is when an employee accepts an offer to leave their position as part of a restructure or reduction in workforce. The employee agrees to the separation, usually in exchange for a redundancy package that may include severance pay, payment in lieu of notice, and leave payouts.
Voluntary redundancy in the Australian Public Service (APS) is when an employee accepts an offer to leave their position as part of a restructure or reduction in workforce. The employee agrees to the separation, usually in exchange for a redundancy package that may include severance pay, payment in lieu of notice, and leave payouts.
How much is an APS voluntary redundancy payment?
It varies based on your length of service and your agency’s enterprise agreement. APS redundancy entitlements are typically calculated as a multiple of your weekly salary for each year of service. Some agencies also offer additional amounts as part of a negotiated separation package.
It varies based on your length of service and your agency’s enterprise agreement. APS redundancy entitlements are typically calculated as a multiple of your weekly salary for each year of service. Some agencies also offer additional amounts as part of a negotiated separation package.
Is an APS voluntary redundancy payment tax-free?
Part of it may be. Genuine redundancy payments receive a tax-free component based on your years of service under ATO rules. In 2025-26, the base tax-free amount is $12,524, plus $6,264 for each completed year of service. Amounts above this are taxed at a concessional 32% (up to the whole-of-income cap) rather than your marginal rate. Payments in lieu of notice and leave payouts are taxed differently.
Part of it may be. Genuine redundancy payments receive a tax-free component based on your years of service under ATO rules. In 2025-26, the base tax-free amount is $12,524, plus $6,264 for each completed year of service. Amounts above this are taxed at a concessional 32% (up to the whole-of-income cap) rather than your marginal rate. Payments in lieu of notice and leave payouts are taxed differently.
What is the APS exclusion period after redundancy?
If you accept a voluntary redundancy, you’re generally restricted from being re-employed in the Australian Public Service for a set period. The length of this restriction is typically tied to the amount of your severance payment — broadly, one week’s salary per week of severance received. This is worth factoring into your financial planning.
If you accept a voluntary redundancy, you’re generally restricted from being re-employed in the Australian Public Service for a set period. The length of this restriction is typically tied to the amount of your severance payment — broadly, one week’s salary per week of severance received. This is worth factoring into your financial planning.
Should I put my redundancy payout into super?
It depends on your circumstances; for some APS employees, contributing part of a redundancy payout to super may be worth considering. Super contributions can reduce your taxable income and help you make use of carry-forward concessional cap rules. The right approach depends on your age, current super balance, contribution history, and broader financial goals. A financial adviser can help you model the options.
It depends on your circumstances; for some APS employees, contributing part of a redundancy payout to super may be worth considering. Super contributions can reduce your taxable income and help you make use of carry-forward concessional cap rules. The right approach depends on your age, current super balance, contribution history, and broader financial goals. A financial adviser can help you model the options.
What happens to my Comsuper (PSS/CSS) entitlements in a redundancy?
If you’re a member of the Public Sector Superannuation Scheme (PSS) or Commonwealth Superannuation Scheme (CSS), your entitlements under those schemes are separate from your redundancy payment. The rules around what you receive and when depend on your scheme, your age, and your years of membership. It’s important to get advice specific to your scheme before accepting a redundancy offer.
If you’re a member of the Public Sector Superannuation Scheme (PSS) or Commonwealth Superannuation Scheme (CSS), your entitlements under those schemes are separate from your redundancy payment. The rules around what you receive and when depend on your scheme, your age, and your years of membership. It’s important to get advice specific to your scheme before accepting a redundancy offer.
Can I negotiate my APS redundancy package?
In many cases, yes. Particularly around timing, voluntary separation incentives, or additional outplacement support. However, the core redundancy entitlements are usually set by your enterprise agreement. Understanding your entitlements before entering any discussion puts you in a stronger position.
In many cases, yes. Particularly around timing, voluntary separation incentives, or additional outplacement support. However, the core redundancy entitlements are usually set by your enterprise agreement. Understanding your entitlements before entering any discussion puts you in a stronger position.
What should I do financially before accepting a redundancy offer?
Before you accept, it’s worth getting a clear picture of your total package, understanding the tax implications of each component, working out your cash flow through any exclusion period, and considering whether to make a super contribution. Getting financial advice at this stage can be valuable.
Before you accept, it’s worth getting a clear picture of your total package, understanding the tax implications of each component, working out your cash flow through any exclusion period, and considering whether to make a super contribution. Getting financial advice at this stage can be valuable.
How long does an APS redundancy payment take to process?
Processing times vary by agency, but payments are typically made on or around your separation date. Your final pay will include your redundancy components, leave payouts, and any other entitlements.
Processing times vary by agency, but payments are typically made on or around your separation date. Your final pay will include your redundancy components, leave payouts, and any other entitlements.
Do I need a financial adviser for APS redundancy?
You’re not required to get advice, but it’s often worth it. An APS redundancy package can be a significant sum, and the decisions you make in the first few months, around tax, super, debt, and investment, have long-term consequences. An adviser can help you understand your options clearly and avoid costly mistakes. Many APS departments offer a one-off reimbursement to cover the cost of an initial financial advice consultation,
You’re not required to get advice, but it’s often worth it. An APS redundancy package can be a significant sum, and the decisions you make in the first few months, around tax, super, debt, and investment, have long-term consequences. An adviser can help you understand your options clearly and avoid costly mistakes. Many APS departments offer a one-off reimbursement to cover the cost of an initial financial advice consultation,
