AU Redundancy Pay Calculator

Australia Redundancy Pay Calculator 2025–26 — Free NES & Tax Estimator

What Is Redundancy Pay in Australia?

Redundancy pay — also called severance or retrenchment pay — is the compensation you receive when your employer permanently eliminates your job. Under the National Employment Standards (NES) in the Fair Work Act 2009, most employees with at least one year of continuous service are entitled to redundancy pay based on their base weekly rate multiplied by a number of weeks set by their length of service. This is a minimum; your Modern Award, enterprise agreement or contract may provide more.^{[Fair Work]}

A genuine redundancy — the most favourable type for tax — happens when three conditions are all met: the employer no longer needs anyone to do your job; the employer met any consultation obligations in the applicable award or agreement; and it wasn't reasonable to redeploy you within the business or an associated entity. When all three apply, part of your payout is completely tax-free.

A non-genuine redundancy happens when the dismissal is due to reaching normal retirement age, the employee is at age-pension age (67) or older, or the role wasn't truly abolished. Non-genuine payments get no tax-free component and are taxed entirely as an Employment Termination Payment (ETP).

Redundancy pay vs notice pay. These are two separate NES entitlements. Redundancy pay compensates for the permanent loss of your role; notice pay (or pay in lieu of notice) compensates for the warning period your employer must give. Both are paid on top of any accrued annual leave and, where it applies, long service leave.

Who Should Use This Redundancy Calculator?

This calculator is for anyone working through the end of a role that's being abolished under the Fair Work Act. It's most useful if you are:

• An employee being made redundant, checking your Fair Work entitlement before final pay is issued
• An HR manager or payroll officer working out redundancy and severance costs for one or more staff
• A business owner planning a restructure who needs to budget redundancy, notice and leave
• A worker aged 45+ checking the extra one week of notice under the NES
• An employee with 10+ years of service trying to understand the 12-week cap and long service leave
• A small business owner confirming whether the under-15-employee exemption applies to you
• A tax adviser or accountant needing a quick tax-free and ETP breakdown for 2025–26

How to Use This Redundancy Pay Calculator

Enter a few details and the calculator returns your NES weeks, notice pay, leave payout, tax-free amount, ETP tax and estimated net payout. Here's what each field means:

1. Enter your annual salary — use your base salary only. Don't include bonuses, allowances or super; NES redundancy pay is calculated on the base rate of pay.
2. Enter years of continuous service — use decimals for part years (3.5 = three and a half). Continuous service includes paid leave but not unpaid leave. Only completed full years count toward the tax-free limit.
3. Enter your age at dismissal — used for your notice entitlement (the age 45+ extra week) and to decide which ETP tax rate applies (preservation age 60).
4. Enter unused annual leave days — all accrued but untaken leave is paid out. Leave loading of 17.5% applies if your award provides it.
5. Select genuine or non-genuine redundancy — genuine redundancy unlocks the ATO tax-free component. If unsure, select yes and read the notes in your result.
6. Confirm employer size — under 15 employees usually means no NES redundancy pay, though notice and leave payout are still owed.
7. Click Calculate — see your full breakdown: NES weeks, notice pay, leave payout, tax-free amount, ETP tax and estimated net.

NES Redundancy Pay Scale — Australia 2025–26

Here are the minimum redundancy entitlements under the Fair Work Act for national-system employees. These are minimums — your award or agreement may provide more.

Notice Pay Scale — NES Australia

On top of redundancy pay, your employer must give written notice of termination or pay it in lieu. The NES minimum notice periods are:

Genuine Redundancy Tax-Free Limit — Quick Reference 2025–26

Look up your tax-free redundancy amount for 2025–26 by completed years of service. Formula: $13,100 + ($6,552 × completed years).

How Redundancy Pay Is Taxed: ETP Rates and the ETP Cap

Only completed full years of service count toward the tax-free limit — 7 years and 11 months counts as 7 years. Any part of a genuine redundancy above the tax-free limit becomes the taxable component of an Employment Termination Payment (ETP) and is taxed at concessional rates:

The ETP cap for 2025–26 is $260,000 (up from $245,000 in 2024–25). The tax-free component doesn't count toward this cap. Any taxable ETP amount above the cap is taxed at the top marginal rate. Unused annual leave paid on a genuine redundancy is taxed at a concessional maximum of 32%, rather than your full marginal rate.^[ATO] To see how a taxable ETP interacts with your other income for the year, use our Australia Income Tax Calculator.

Worked Examples — Redundancy Pay Calculations

Edge Cases and Exemptions

Small business exemption (fewer than 15 employees). Employers with fewer than 15 employees at the time of dismissal are usually exempt from NES redundancy pay. The headcount includes all employees — full-time, part-time and regular casuals — plus those of associated entities. Notice pay and accrued leave payout are still mandatory, and some Modern Awards impose redundancy obligations on small businesses regardless. Note: since the Closing Loopholes changes, a larger employer that shrinks below 15 because of insolvency or bankruptcy generally can't rely on this exemption.

Less than 12 months' service. No NES redundancy pay applies to employees with under 12 months of continuous service, regardless of employer size.

Age-pension age. Employees at or above age-pension age (currently 67) on the dismissal date don't qualify for the genuine redundancy tax-free component; the payment is taxed as an ETP.

Casual employees. Casuals employed on an irregular or intermittent basis have no continuous service and generally aren't entitled to NES redundancy pay. Regular and systematic casuals may have entitlements under an award or agreement.

Fixed-term contracts. When a fixed-term contract simply ends on its agreed date, that isn't a redundancy under the NES, so redundancy pay generally doesn't apply.

Serious misconduct. Employees dismissed for serious misconduct aren't entitled to notice pay but keep their accrued leave payout. Redundancy pay doesn't apply because the dismissal isn't a redundancy.

When to Act — Redundancy Deadlines and Penalties

Final pay timing. Final entitlements — redundancy pay, notice and leave payout — are usually paid within 7 days of your last day, though the exact timeframe depends on your award, agreement or contract. Since 1 January 2025, deliberate underpayment of employee entitlements is a criminal offence under the Closing Loopholes laws, with heavy penalties for employers.

Centrelink / JobSeeker waiting period. A redundancy payment can trigger an income maintenance period with Services Australia, during which you generally can't claim JobSeeker. It's based on the redundancy amount expressed as a number of weeks of pay.

ETP 12-month rule. To receive concessional ETP tax treatment, a payment generally must be made within 12 months of termination — though the taxable component of a genuine redundancy is not subject to this 12-month rule.

Unfair dismissal — 21-day deadline. You can't claim unfair dismissal if your dismissal is a genuine redundancy. But if you believe it wasn't genuine, you have just 21 days from the dismissal date to lodge a claim with the Fair Work Commission. Miss it and you generally lose the right to claim.

Frequently Asked Questions — Redundancy Pay Australia

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