Redundancy Pay Calculator AU 2025-26

What this calculator works out

This calculator estimates an Australian redundancy payout under the Fair Work Act 2009 National Employment Standards (NES) and the ATO genuine redundancy and Employment Termination Payment (ETP) rules for FY2025-26. It separates the four components that usually appear on a redundancy final pay slip — NES redundancy weeks, payment in lieu of notice, accrued annual leave, and accrued long service leave — applies the FY2025-26 tax-free limit (A$13,100 base + A$6,552 per completed year of service), and reports the taxable ETP at the concessional rate that matches the recipient's age at the dismissal date.

It is most useful when comparing the after-tax position across different scenarios: a long-service employee whose payout sits entirely under the tax-free limit, a senior employee whose excess sits inside the ETP cap and attracts the concessional 32% (or 17% above preservation age), or a short-service employee who relies on award-based redundancy rather than NES.

The formula and where the rates come from

Every figure used here comes from a primary source — the Fair Work Act 2009 National Employment Standards published by the Fair Work Ombudsman, the ATO genuine redundancy threshold tables, and the ATO ETP cap.

Setting	FY2025-26 value	Source
NES redundancy scale	0 weeks (under 1 yr) up to 16 weeks (9-10 yrs), 12 weeks at 10+ yrs	Fair Work Act 2009 s.119 / Fair Work Ombudsman
Genuine redundancy tax-free base	A$13,100	ATO — Genuine redundancy and early retirement scheme limits
Genuine redundancy tax-free per-year	A$6,552 per completed year of service	ATO — Genuine redundancy thresholds
ETP cap	A$245,000	ATO — Key superannuation rates and thresholds
ETP concessional rate, under preservation age	32% (30% + 2% Medicare Levy)	ATO — Taxation of employment termination payments
ETP concessional rate, at or over preservation age	17% (15% + 2% Medicare Levy)	ATO — Taxation of employment termination payments
Preservation age	60 (anyone born after 1 July 1964)	ATO — Preservation age

The full Fair Work NES sliding scale by completed years of continuous service:

Completed years	NES weeks
Less than 1	0 (not entitled)
1 to 2	4
2 to 3	6
3 to 4	7
4 to 5	8
5 to 6	10
6 to 7	11
7 to 8	13
8 to 9	14
9 to 10	16
10 or more	12

The 12-week cap at 10+ years is intentional — most state and territory long service leave Acts unlock pro rata long service leave at around 7 to 10 years, so the NES drops back to 12 weeks once LSL is generally accruing.

The calculation runs as:

1. NES weeks — read from the Fair Work scale based on completed years of service. Less than one year = 0.
2. Gross redundancy = NES weeks × ordinary base weekly pay (excluding overtime, allowances, bonuses, commissions).
3. Tax-free limit = A$13,100 + A$6,552 × completed years.
4. Taxable ETP = max(0, gross redundancy − tax-free limit).
5. ETP rate = 32% if age < 60, otherwise 17%. Applied to the taxable ETP up to the A$245,000 cap; above the cap the top marginal rate of 47% applies (the calculator flags a cap breach).
6. Notice pay = notice weeks × weekly base pay. Taxed as ordinary salary at the marginal rate.
7. Accrued leave = (annual leave days + LSL days) × (weekly pay ÷ working days per week). Estimated at the marginal rate for visibility; actual PAYG follows ATO Schedule 7.
8. Net payout = total gross − ETP tax − marginal-rate tax on notice and leave.

How to read the inputs

• Completed years of continuous service — broken service usually resets the count, but periods of unpaid parental leave generally do not break service under the Fair Work Act. Use whole years; the NES scale only counts completed years.
• Ordinary base weekly pay — the rate the NES relies on. Overtime, shift loadings, allowances, bonuses and commissions are excluded.
• Age at the dismissal date — drives the ETP concessional rate. Preservation age is 60 for anyone born after 1 July 1964.
• Notice paid in lieu — weeks of notice the employer pays out instead of working out. NES notice ranges from 1 to 5 weeks based on service and age.
• Accrued annual and long service leave — unused leave at the dismissal date, in days. The calculator uses the daily ordinary base pay rate (weekly pay ÷ working days per week) to value the payout.
• Working days per week — usually 5 for a standard full-time week. Adjust for compressed-week or part-time arrangements.
• Marginal tax rate — applied as a flat estimate to notice pay and accrued leave. The ETP component uses the concessional rate separately.

Worked examples

1. Mid-career, fully tax-free. A 5-year employee on A$1,500/week (about A$78,000 a year) is made redundant at age 55. NES weeks = 10, so gross redundancy = A$15,000. Tax-free limit = A$13,100 + A$6,552 × 5 = A$45,860. The whole A$15,000 sits inside the tax-free limit, so the taxable ETP is A$0 and no ETP tax applies. With 4 weeks notice in lieu (A$6,000) and 15 days accrued leave at A$300/day (A$4,500), the gross total is A$25,500. At a 30% marginal rate the tax on notice and leave is A$3,150, giving a typical net payout of about A$22,350.

2. Senior at preservation age, partly taxable. A 7-year employee on A$10,000/week (about A$520,000 a year) is made redundant at exactly age 60. NES weeks = 13, so gross redundancy = A$130,000. Tax-free limit = A$13,100 + A$6,552 × 7 = A$58,964. Taxable ETP = A$71,036, well under the A$245,000 ETP cap. Age 60 attracts the 17% concessional rate (15% + 2% Medicare), so ETP tax is around A$12,076.

3. Long-service exec, NES capped at 12 weeks. A 25-year employee on A$20,000/week is made redundant at age 55 with 5 weeks notice in lieu. NES weeks = 12 (capped at 10+), so gross redundancy = A$240,000. Tax-free limit = A$13,100 + A$6,552 × 25 = A$176,900. Taxable ETP = A$63,100. Below preservation age the rate is 32%, so ETP tax = A$20,192. With A$100,000 of notice taxed at 45% (A$45,000), the typical net payout is around A$274,808 on a A$340,000 gross.

4. Under one year of service. An employee at 8 months service is made redundant. NES does not apply (0 weeks) under the Fair Work Act. The employee still receives notice in lieu and any accrued annual leave, but no NES redundancy. Where a modern award or enterprise agreement provides its own redundancy clause that overrides NES, that figure applies — check the Fair Work Ombudsman award database.

5. ATO worked-example pattern, small excess. A 4-year employee on A$5,000/week is made redundant at age 50. NES weeks = 8, gross redundancy = A$40,000. Tax-free limit = A$13,100 + A$6,552 × 4 = A$39,308. Taxable ETP = A$692, taxed at 32% = A$221.44 of ETP tax. The whole net is around A$39,778.

Common pitfalls

• Less than one year of service means no NES redundancy. The Fair Work Act sets a 12-month qualifying period for NES redundancy. Notice in lieu and accrued leave are still payable, but the redundancy weeks are zero.
• The 10+ years cap is real. The NES drops from 16 weeks at 9-10 years to 12 weeks at 10 or more years. The cap reflects long service leave being available under most state laws by then.
• Small business employer exemption. Section 121 of the Fair Work Act exempts employers with fewer than 15 employees from the obligation to pay NES redundancy. Some modern awards override this — check the relevant award.
• "Ordinary base pay" is narrower than total cash pay. The NES uses the ordinary rate of pay before tax, excluding overtime, allowances, bonuses and commissions. Using total package figures inflates the redundancy result.
• The tax-free limit is annual. It applies once per dismissal in a financial year. If two redundancies occur in the same year the second one's ETP cap is reduced by ETPs already paid that year.
• Preservation age is 60 from FY2024-25. Everyone born after 1 July 1964 has a preservation age of 60, so the higher 32% rate applies until that birthday.
• Notice pay is not part of the ETP. Notice in lieu is taxed as ordinary salary at the marginal rate by the employer through PAYG, not at the ETP concessional rate.
• Accrued leave uses ATO Schedule 7, not the marginal rate. This calculator estimates leave at the marginal rate for visibility, but unused annual and long service leave on a genuine redundancy is taxed under Schedule 7 (broadly a flat 32% on the post-1993 component). The actual PAYG withheld depends on accrual dates and the reason for termination.
• Genuine vs non-genuine redundancy. The ATO concessional treatment only applies to a "genuine" redundancy under the Income Tax Assessment Act — broadly, the position is no longer required, the dismissal is involuntary, and the employee is below age pension age (currently 67). Voluntary resignations and dismissals for misconduct do not qualify.

When to talk to a professional

This calculator gives a general estimate based on the Fair Work Act 2009 NES and the ATO genuine redundancy / ETP rules published for FY2025-26. For advice on specific situations — modern award or enterprise agreement redundancy clauses, the small business employer exemption, the income maintenance period under Centrelink, the interaction with super contribution caps, or whether a redundancy is "genuine" for ATO purposes — talk to the Fair Work Ombudsman, a registered tax agent, an industrial-relations lawyer or a financial adviser. Nothing on this page is personal financial, tax or legal advice.

Related calculators

• HECS-HELP repayment calculator — model how a redundancy lump sum changes the year's Help Repayment Income and the compulsory study loan repayment.
• Medicare Levy Surcharge calculator — check whether a redundancy lump sum pushes income for surcharge purposes over the family or single MLS threshold.
• Salary sacrifice super calculator — compare a salary sacrifice top-up before redundancy with claiming a personal deductible contribution from the redundancy proceeds.
• Working holiday tax calculator — for backpacker employees on a 417/462 visa, see how the working-holiday tax schedule treats final pay.
• Division 293 extra super tax calculator — pair with this when a redundancy lump sum pushes Division 293 income over the A$250,000 threshold.

Source: Fair Work Ombudsman — Redundancy pay and entitlements · Fair Work Ombudsman — Notice of termination by employer · ATO — Redundancy payments · ATO — Genuine redundancy and early retirement scheme payment limits · ATO — Key superannuation rates and thresholds (ETP cap).