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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.

How we calculated this

We read completed years of continuous service off the redundancy scale in section 119 of the Fair Work Act 2009 (4 weeks after one year, rising to 16 weeks at 9 years, then 12 weeks at 10 or more) and multiply the weeks by the weekly base pay for ordinary hours you entered. Small business employers are shown as owing no NES redundancy pay. We then apply the genuine redundancy tax-free limit for 2026-27, a base amount plus an amount per completed year, and flag anything above it as an employment termination payment. The working, the assumptions and the sources are below.

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

Your working
Assumptions
  • Applies the section 119 scale: 4 weeks for at least 1 year of service, 6 for 2, 7 for 3, 8 for 4, 10 for 5, 11 for 6, 13 for 7, 14 for 8, 16 for 9, then 12 weeks at 10 years or more. That drop is the law: long service leave was assumed to take over. Under 12 months of service earns nothing under the NES.
  • Weekly pay is the base rate for ordinary hours: no overtime, penalties, allowances, bonuses or loadings. Enter total earnings and the figure is too high. Awards, agreements, contracts and policies can provide more, and the most generous instrument applies.
  • Small business means fewer than 15 employees by headcount at the time, counting part-timers, regular casuals, employees of associated entities and the people being made redundant. Some award industry schemes still require redundancy pay, so the exemption is a check rather than a conclusion.
  • The tax-free amount assumes a genuine redundancy: the position itself is abolished, and the employee is under Age Pension age at dismissal. At or over that age, the whole payment is an employment termination payment. The 2026-27 limit is $13,598 plus $6,801 for each completed year, indexed every 1 July; the excess is taxed at concessional withholding rates (32% under 60, 17% from 60) up to the $270,000 ETP cap.
  • Notice is owed on top, and so are unused annual leave and long service leave; none of them is included in the figure. Super guarantee is not payable on redundancy pay.
Sources

What to do about it

The payment is the part with a formula. Whether the redundancy is genuine and what happens to the people who stay are the parts that decide whether this restructure holds up. These steps are for whoever runs the process, whether or not they made the call to restructure.

1

Check the instrument and the definition before the number

Read every instrument that covers the role for a redundancy clause that pays more than the NES; the most generous applies. Confirm the headcount if you are relying on the small business exemption, and confirm the role is actually disappearing rather than being refilled under another title. Consultation obligations in the award start here too.

2

Build the payment in layers and put each on the letter

Redundancy pay at base rate for ordinary hours. Notice or payment in lieu on top. Unused annual leave and long service leave on top of that. Then the tax split: the tax-free amount and the ETP portion with its withholding. Set out each line so nobody has to reconstruct it, and get the tax treatment confirmed by payroll or an adviser.

3

Write down the business reason and the selection criteria

One page: why the role goes, how the person was chosen if others do similar work, what redeployment was considered, and who was consulted and when. Written before the conversation, not after. It is what an unfair dismissal claim will turn on, and it is fairer to the person.

4

Decide what the business can afford to lose, in capability terms

Before the list is final, map what each affected person actually does and knows against what the business still has to deliver. Restructures that cut roles on the org chart routinely remove the one person who held a client relationship or a critical system together. If you cannot say what walks out the door, you are not ready to sign.

5
Where a tool helps

Read the people who stay in the weeks after

Engagement usually drops after a restructure, and the best remaining people are often the first to update their CVs. Talk to the teams. Watch for the second wave of exits, and measure it rather than assume it. The payout above ends one employment. What it does to the rest is the bigger number.

One person leaves.
Everyone else stays.

Compono Engage is an employee engagement platform that reads culture and climate alongside work personality, so you can see how each team is absorbing a change while there is still time to act. HR systems process the redundancy cleanly. Almost none of them tell you what it did to the people who watched it happen.

Step 5 asks you to read the people who stay. Engage does that continuously, team by team, and flags where the second wave of exits is forming before the resignations arrive. It also helps with step 4 next time, because the same platform holds a work personality and team-shape read on the people you are deciding between. The payment above is one line. The engagement of everyone left is the cost nobody prices.

See how it works
Compono Engage
8%+
reduction in turnover

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.

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