How redundancy pay is calculated
Three separate calculations stack on top of each other, and mixing them up is the most common reason online estimates disagree:
- Weeks of pay — the NES table converts completed years of service into weeks of pay at your base rate: 4 weeks at 1 year, rising to 16 weeks at 9 years, then down to 12 weeks at 10 or more.
- The tax-free slice — a genuine redundancy is tax-free up to $13,598 + $6,801 per completed year (FY 2026–27). Most redundancies at ordinary salaries fall entirely inside this limit, meaning no tax at all.
- ETP tax on the rest — anything above the tax-free limit is an employment termination payment: 32% withholding under preservation age (60), 17% at or over it, and 47% above the $270,000 ETP cap.
A worked example
A 47-year-old on $96,200 ($1,850/week), made redundant after 8 years 6 months with 3 weeks of annual leave owing — computed with the same engine as the calculator above:
| Completed years of service | 8 (the 6 months doesn't count) |
| NES redundancy weeks | 14 weeks |
| Gross redundancy pay | $25,900 |
| Tax-free limit | $68,006 — the whole payment fits inside it |
| Tax on redundancy pay | $0 |
| Unused leave payout | $5,550 less $1,776 withheld (32% flat) |
| Net payout | $29,674 |
Frequently asked questions
How many weeks of redundancy pay do I get?
The National Employment Standards scale runs from 4 weeks (at least 1 year of service) up to 16 weeks (at least 9 years), then steps DOWN to 12 weeks at 10 or more years. Your award or agreement can top this up but not cut it down. Only completed years count.
Why does redundancy pay go down after 10 years of service?
The NES table peaks at 16 weeks for 9 years and drops to 12 weeks from 10 years. Parliament set it that way on the assumption that employees with 10+ years also receive long service leave. If you are near the 9/10-year boundary, the difference is 4 weeks of pay.
Is redundancy pay tax free?
Partly, if it is a genuine redundancy and you are under age-pension age. In FY 2026–27 the tax-free limit is $13,598 plus $6,801 for each completed year of service. Anything above that is an employment termination payment (ETP), taxed at 32% under preservation age or 17% at or over it, up to the ETP cap.
What is a genuine redundancy?
Your job itself is abolished — the employer no longer needs that role done by anyone — and the dismissal is not for performance or conduct reasons. Voluntary redundancy programs generally qualify. If you are simply dismissed and replaced, that is not a genuine redundancy and the tax-free amount does not apply.
Does a small business have to pay redundancy?
Generally no. Employers with fewer than 15 employees (counting regular casuals and employees of associated entities) are exempt from NES redundancy pay. Exceptions: some industry awards (building and construction, black coal, manufacturing and others) have their own redundancy schemes, and some liquidation-downsizing cases from December 2023 onward still owe it. Notice and unused leave are still payable.
Do casuals get redundancy pay?
No — casual employees are excluded from NES redundancy pay, and casual service generally does not count toward continuous service for it. Casuals are still owed their unused entitlements and any award-specific amounts.
Is unused annual leave taxed differently on redundancy?
Yes. On a genuine redundancy, unused annual leave (and any leave loading) is withheld at a flat 32%, whatever your income. On an ordinary resignation it is taxed at your marginal rates instead.
What lands in my bank account, and when?
Your employer must pay out redundancy pay, notice (if paid in lieu), and unused leave in your final pay. Pay in lieu of notice is due on or before your last day; most awards require the rest within 7 days of your last day. The net figure this calculator shows is after the withholding your employer is required to apply.
Related tools
- Final pay calculator — notice, unused leave and everything else in your last pay
- Long service leave calculator — your LSL payout, state by state
- Redundancy tax explained — the tax-free limit, ETPs and worked examples
- What makes a redundancy genuine — the Fair Work and tax tests
- Redundancy at 45, 60 and 67 — how age changes the payout
- Small business redundancy — the 15-employee rule
- Paying redundancy as an employer — a step-by-step checklist
Sources
Figures on this page come from the following primary sources. The date is when we last checked the page against the source.
- Redundancy pay and entitlements (Fair Work Ombudsman), checked 7 August 2026.
- Who doesn't get redundancy pay (Fair Work Ombudsman), checked 24 September 2026.
- Key superannuation rates and thresholds: employment termination payments (ATO), checked 7 August 2026.
- Schedule 11: tax table for employment termination payments (ATO), checked 7 August 2026.
- Schedule 7: tax table for unused leave payments on termination (ATO), checked 7 August 2026.
- Genuine redundancy payments (ATO), checked 10 August 2026.
- Tax rates for Australian residents (ATO), checked 17 September 2026.
Rates current for FY 2026–27, last verified 2026-08-07. Independent guide — not a government service, and not financial or legal advice. Verify your entitlement with the Fair Work Ombudsman and tax treatment with the ATO before acting.