Redundancy Pay Calculator

💡 The tax-free treatment of genuine redundancy is one of the most generous concessions in the tax system. In 2025–26, the tax-free limit is $12,524 plus $6,264 per completed year of service — so after 10 years, over $75,000 of your redundancy payment can be completely tax-free.

Is This Calculator Accurate?

It applies the exact NES redundancy scale and the 2025–26 genuine redundancy tax-free limit. However, many employees are entitled to more than the NES minimum through an award, enterprise agreement, or employment contract — always check those documents, as they override the NES floor when more generous. The calculator also can't determine whether your redundancy is "genuine" for tax purposes (a legal test), apply the small business exemption details, or calculate the exact ETP tax above the tax-free limit. Treat it as a reliable baseline estimate.

How to Choose Your Inputs

Years of service: Count continuous service with the same employer — periods of unpaid leave generally still count as continuous. Weekly pay: Use your base rate only; the NES uses ordinary time earnings, not your total package with overtime and bonuses. Age: Employees over 45 with 2+ years of service get an extra week of notice. Small business: Employers with fewer than 15 employees are generally exempt from redundancy pay under the NES, though notice still applies.

Why Redundancy Pay Rules Are Australia-Specific

Australia's redundancy pay framework is set by the Fair Work Act and the National Employment Standards — a uniquely Australian legislative structure. The specific scale of weeks per year of service, the small business exemption, the interaction with awards and enterprise agreements, and the genuine redundancy tax-free limit administered by the ATO are all particular to the Australian system. This calculator is built specifically for Australian employees using current NES entitlements and 2025–26 ATO thresholds.

Suitable for Women

Yes — redundancy entitlements are identical regardless of gender. One point particularly relevant for women: periods of paid and unpaid parental leave generally count as continuous service for redundancy purposes, so taking parental leave doesn't reset your service clock. If you're made redundant while on or shortly after returning from parental leave, you're still entitled to redundancy pay based on your full continuous service — and there are specific protections against redundancy being used as a disguise for discrimination during or after parental leave.

Suitable for Men

Yes — the same NES scale and tax treatment apply. For employees over 45, note the extra week of notice entitlement. Men in higher-paid roles should pay particular attention to the ETP cap and the tax treatment of amounts above the tax-free limit — large redundancy payouts can push part of the payment into ETP tax, and the timing of when you receive the payment (and whether you've reached preservation age) affects the rate. Professional advice on a large payout usually pays for itself.

Genuine vs Non-Genuine Redundancy

The tax-free treatment only applies to a genuine redundancy — where your position is genuinely no longer required and you're under age 65 (and the dismissal isn't at normal retirement age or a contract end). If the redundancy isn't genuine (for example, you're dismissed for performance and it's labelled redundancy, or you've reached pension age), the payment is taxed as an ETP without the redundancy tax-free limit. The distinction is legally defined and significantly changes the tax outcome — if there's any doubt, get advice before accepting the payment.

Common Mistakes to Avoid

• Assuming the NES is the maximum. Awards, enterprise agreements, and contracts often provide more generous redundancy pay — always check them.
• Including overtime and bonuses in weekly pay. The NES uses your base ordinary rate, not your total earnings.
• Forgetting notice is separate from severance. You're generally entitled to both notice (or pay in lieu) and redundancy pay.
• Not checking the redundancy is genuine. Non-genuine redundancies lose the generous tax-free treatment.
• Overlooking the 10-year pay reduction. The NES scale curiously drops from 16 weeks at 9–10 years to 12 weeks at 10+ years, because long service leave becomes available — a quirk that surprises long-tenured employees.

Limitations of This Calculator

This calculator estimates NES redundancy pay and the tax-free portion. It does not calculate the exact ETP tax on amounts above the tax-free limit, apply award or enterprise agreement entitlements that exceed the NES, determine whether your redundancy is genuine, handle the small business exemption nuances, or account for redundancy trust funds (common in construction). For your exact entitlement, check the Fair Work Ombudsman redundancy pages and consult a tax agent for the tax treatment.

Frequently Asked Questions