Redundancy Payout Calculator

How the NES redundancy scale works

Under the National Employment Standards your redundancy entitlement comes from how long you have worked continuously for the same employer. The Fair Work Act sets the scale and it covers most employees in the national workplace relations system.

That drop from 16 weeks to 12 weeks at ten years is not a typo, and it surprises almost everyone. It is written into the legislation, it applies regardless of your industry, and it means the timing of your last day can genuinely cost you four weeks of pay. The weeks figure is calculated on your base rate for ordinary hours, so bonuses, loadings, allowances, overtime and penalty rates are all excluded.

What your payout is actually made of

Most people treat a redundancy package as one number. It is usually four, each taxed its own way, and the difference decides what you keep.

Redundancy pay is the NES entitlement from the scale above, at your base rate. Notice, or pay in lieu of it, sits on top and is paid at your full rate, which does include loadings, allowances and regular overtime. Where a redundancy is genuine, pay in lieu of notice forms part of the genuine redundancy payment, so it shelters under the same tax-free limit rather than being taxed as ordinary wages.

Unused annual leave and unused long service leave are different animals. The ATO keeps them out of the termination payment entirely. On a genuine redundancy they are capped at 30% plus the 2% Medicare levy, and, importantly, they do not consume any of your tax-free limit. That is why a big leave balance is worth more on a redundancy than people expect.

How the tax actually works

If your redundancy is genuine, meaning the position is abolished, the decision is not personal, and you are under age pension age, part of the payment is tax free. For 2026-27 the limit is $13,598 plus $6,801 for each complete year of service. Only complete years count. Six years and eight months is six years.

Anything above that limit becomes an employment termination payment. Under preservation age, which is 60 for everyone born after 30 June 1964, the taxable part is taxed at 30% plus the 2% Medicare levy. At or above preservation age it drops to 15% plus 2%. Both of those are ceilings applied by a tax offset rather than flat rates, so if your income for the year is low, your own marginal rate applies instead and you pay less. Above the ETP cap of $270,000 the concession disappears and the rate jumps to 47%.

Worked through: you are 38, you have six complete years of service, and the redundancy pool comes to $80,000. Your tax-free limit is $13,598 plus six lots of $6,801, which is $54,404. The remaining $25,596 is an employment termination payment taxed at 32%, so $8,191 comes off. You keep about $71,809 from that component, with notice and leave calculated on top.

Who misses out

The NES entitlement does not reach everyone. Small business employees are the biggest group: if your employer has fewer than 15 staff at the time, no NES redundancy pay is owed. An award or enterprise agreement can still require one, so check your instrument before accepting that answer.

Under 12 months of continuous service means nothing under the NES, with no partial entitlement. Unpaid leave does not count towards continuous service, so six months of unpaid leave can pull you down a rung on both the scale and the tax-free limit. Casual employees are generally out too, although a long, regular and systematic casual arrangement can be a grey area worth advice.

The most expensive exclusion is a non-genuine redundancy. If you resigned voluntarily, or you are dismissed at or above age pension age, there is no tax-free amount at all. The entire payment becomes an ETP. On a long service history that difference can run well past $50,000, which is why the distinction is worth getting right in writing before you sign anything.