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Redundancy Pay and Tax Calculator (Australia)

Work out redundancy pay under the National Employment Standards, and how much of it is tax free.

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Whole years only. Unpaid leave doesn't count toward the total
Excludes overtime, allowances, bonuses and penalty rates
NES redundancy pay
 
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How much redundancy pay do employees get in Australia?

Under the National Employment Standards, between 4 and 16 weeks of pay at the base rate, depending on years of continuous service: 4 weeks after 1 year, rising to 16 weeks at 9 years, then 12 weeks for 10 years or more. Awards, agreements and contracts can provide more. Employees of small businesses (fewer than 15 employees) are generally not entitled to NES redundancy pay.

Where Compono fits

A restructure is the moment the two kinds of HR risk collide. The process risk is the paperwork you are on this page for. The people insight risk is quieter: which capability walks out the door, and what happens to the engagement of everyone who stays. Most HR systems cannot answer either question, because they track roles, not what people can actually do. Compono maps capability, culture and engagement across the organisation, so a restructure is designed around what the business can afford to lose rather than discovered afterwards. Compono holds 4.8 out of 5 on Capterra and is used by government departments and mid-market employers across Australia and New Zealand.

See how it works

How it's calculated

Redundancy pay follows the scale in section 119 of the Fair Work Act: it starts at 4 weeks for at least a year of continuous service, climbs to a peak of 16 weeks at 9 years, then drops to 12 weeks at 10 years or more, a quirk that exists because long service leave was assumed to take over at that point. The entitlement is paid at the employee's base rate for ordinary hours, and it is separate from notice, which is owed on top. Small business employers (fewer than 15 employees by headcount) are generally exempt from NES redundancy pay, though some awards contain industry-specific schemes that apply anyway. On tax: a genuine redundancy payment is tax free up to a limit set each financial year, made up of a base amount plus an amount for each completed year of service. Anything above the limit is an employment termination payment (ETP), generally taxed at concessional rates up to the ETP cap. The calculator shows the tax-free portion and flags what falls outside it. This is general guidance, not legal or tax advice.

New to the term? Read the plain-English definition of redundancy pay in the HR Glossary.

Common questions

Why does redundancy pay drop after 10 years of service?

The scale peaks at 16 weeks for 9 to 10 years of service, then falls to 12 weeks at 10 years or more. The reasoning built into the scale is that long service leave becomes available at around the 10-year mark and partly compensates for the reduction. It looks like an error. It is the actual law.

Is redundancy pay tax free?

Up to a limit, yes. In 2026-27 a genuine redundancy payment is tax free up to $13,598 plus $6,801 for each completed year of service, indexed each 1 July. The excess is taxed as an employment termination payment at concessional withholding rates (32% under age 60, 17% from 60) up to the $270,000 ETP cap. To qualify as a genuine redundancy for tax, the position must actually disappear and the employee must be under Age Pension age at dismissal.

Is redundancy pay on top of notice?

Yes. Notice of termination (or payment in lieu) and redundancy pay are separate NES entitlements, and unused annual leave and any long service leave are paid out on top of both, each with their own tax treatment.

Do small businesses ever have to pay redundancy?

Sometimes. The small business exemption covers employers with fewer than 15 employees by simple headcount (regular casuals included), but some modern awards carry industry-specific redundancy schemes that still apply, and an employment contract or agreement can promise more than the NES. Check the instrument that covers the role. This is general guidance, not legal advice.

This page is general information, not legal advice. We check figures annually and update them on a best-efforts basis, but employment rules change and we cannot promise everything here is current or complete. Before you act on it, confirm the detail with the Fair Work Ombudsman or your own adviser. Last reviewed July 2026.