Redundancy pay calculator · 2026–27

Redundancy pay calculator Australia 2026–27

Q: How much redundancy pay am I entitled to in Australia?

Under the National Employment Standards, redundancy pay runs from 4 weeks of ordinary pay at 1 to 2 years of continuous service up to 16 weeks at 9 to 10 years, then drops to 12 weeks at 10 or more years because long service leave takes over. Employees with less than 12 months service, most casuals, and employees of small business employers with fewer than 15 staff are not entitled to NES redundancy pay.

Q: Is redundancy pay tax-free in Australia?

A genuine redundancy payment is tax-free up to $13,598 plus $6,801 for each completed year of service in 2026–27. In practice an employee paid the NES minimum pays no tax on it at all unless they earn more than about $235,700 a year, because the tax-free limit is larger than the entitlement at every length of service below that.

Q: How is the amount above the tax-free limit taxed?

The excess becomes a genuine redundancy employment termination payment. Up to the $270,000 ETP cap for 2026–27 it is taxed at 17% if you are 60 or older, or 32% if you are younger. Both rates already include the 2% Medicare levy. Anything above the cap is taxed at 47%.

Q: How much notice am I owed on top of redundancy pay?

Minimum notice under the NES is 1 week for under a year of service, 2 weeks for 1 to 3 years, 3 weeks for 3 to 5 years and 4 weeks beyond 5 years, plus an extra week if you are over 45 with at least 2 years of continuous service. Notice is separate from redundancy pay and can be paid in lieu.

Redundancy is two questions, and most tools answer only one. Fair Work tells you how many weeks you're owed; the ATO explains the tax without the dollars. This does both: your NES entitlement in weeks, then the genuine redundancy tax-free amount and the ETP tax on anything above it.

Fair Work NES + 2026–27 ATO rates · last verified 15 August 2026

Your employment

Weekly ordinary pay

Base rate only — not overtime, bonuses or most allowances.

Years of continuous service Entitlement uses full years; the tax-free amount uses completed years.

Your age Affects notice (over 45) and the ETP rate (60+).

Small business employerFewer than 15 employees — exempt from NES redundancy pay Paid in lieu of noticeAdds your NES notice period

Other payments & overrides

Unused annual / long service leave ($)

Override the weeks of redundancy pay Use this if your contract, award or enterprise agreement is more generous.

Financial year

redundancy payment, after tax

This calculator needs JavaScript. The NES entitlement table and the full tax rules below work without it.

Estimate only. Your award or enterprise agreement may provide more than the NES minimum. Not financial or legal advice.

How much redundancy pay are you entitled to?

The minimum is set by the National Employment Standards — a scale of weeks based on your period of continuous service. An award or registered agreement can set more, never less.

Minimum NES redundancy pay. Each week is a week of ordinary pay — your base rate, not counting overtime or most allowances. Source: Fair Work Ombudsman, verified 15 August 2026.
Period of continuous service	Redundancy pay
Less than 1 year	Nil
1 – 2 years	4 weeks
2 – 3 years	6 weeks
3 – 4 years	7 weeks
4 – 5 years	8 weeks
5 – 6 years	10 weeks
6 – 7 years	11 weeks
7 – 8 years	13 weeks
8 – 9 years	14 weeks
9 – 10 years	16 weeks
10+ years	12 weeks

Yes, it really does drop at 10 years. Going from 16 weeks to 12 looks like a typo, but it's the actual NES scale. The reasoning is that by 10 years you've accrued long service leave, which is paid out separately — so the redundancy entitlement steps back down. It catches people out every time.

Who doesn't get NES redundancy pay

Employees with less than 12 months' continuous service.
Small business employers — fewer than 15 employees. Notice of termination still applies, and an award or agreement may still require redundancy pay.
Casual employees, and employees engaged for a specified task or period.

Notice is separate

Notice of termination sits on top of redundancy pay and can be paid in lieu. The NES minimum is 1 week under a year of service, 2 weeks from 1–3 years, 3 weeks from 3–5 years and 4 weeks beyond 5 years — plus an extra week if you're over 45 with at least 2 years' service. Tick "paid in lieu of notice" above to add it.

How redundancy pay is taxed

A genuine redundancy is treated far more kindly than ordinary salary: part is completely tax-free, and the rest is taxed at capped concessional rates.

Tax-free base

$13,598

Per completed year

$6,801

ETP cap

$270,000

ETP rate under 60

32%

ETP rate 60+

17%

2026–27 figures. Source: ATO — tax-free part of a genuine redundancy · ATO — how ETP components are taxed. Indexed each 1 July. Last verified 15 August 2026.

The tax-free limit is $13,598 + $6,801 × completed years of service. Ten completed years gives $81,608 tax-free. Only completed years count — seven years and eleven months is seven years.

Whatever sits above that limit becomes a genuine redundancy ETP. Up to the $270,000 cap it's taxed at 17% if you're at or above preservation age (60 for anyone born after 30 June 1964) or 32% if you're younger. Both rates already include the 2% Medicare levy — they're 15% + 2% and 30% + 2% respectively, which is a detail some sources render ambiguously as "32% plus Medicare". Anything above the cap is taxed at 47% (45% + 2%).

The mistake worth avoiding: the ETP is not added to your salary and taxed at your marginal rate. Treating it that way — as some quick estimates do — can overstate your tax bill by thousands. The concessional flat rates are the whole point of the redundancy concession.

Why almost every NES redundancy is entirely tax-free

Here's something no redundancy page seems to state plainly, and it changes what most people should worry about.

The tax-free limit grows with service at $6,801 a year. The NES entitlement also grows with service — but in weeks of your pay. Compare the two at every length of service and the tax-free limit wins comfortably, unless your pay is very high.

The weekly pay at which an NES-minimum redundancy would first exceed the tax-free limit, by years of service. 2026–27 figures. Below these amounts, the entire NES redundancy payment is tax-free.
Service	NES weeks	Tax-free limit	Weekly pay needed to be taxed	≈ annual salary
1 year	4	$20,399	$5,100	$265,187
2 years	6	$27,200	$4,533	$235,733
5 years	10	$47,603	$4,760	$247,536
7 years	13	$61,205	$4,708	$244,820
9 years	16	$74,807	$4,675	$243,123
10+ years	12	$81,608	$6,801	$353,635

The lowest figure in that last column is about $235,700, at two years of service. So: if you are paid the NES minimum and earn less than roughly $235,700 a year, your redundancy payment is entirely tax-free — at every length of service, with no ETP tax whatsoever.

Which means the ETP rules, for most people, only start to matter when a contract or enterprise agreement pays more than the NES minimum — the three-weeks-per-year style packages common in banking, mining and the public sector. If that's you, use the "override the weeks" field above to model the real figure. If you're on the statutory minimum, the tax section is likely academic, and the number that actually matters is your weeks × your weekly pay.

Derived from the NES scale and the ATO tax-free formula above; each row is the tax-free limit divided by the NES weeks. Reproducible in the calculator, and pinned by the site's test suite.

How this is calculated

Entitlement. Your years of continuous service are matched to the NES scale above to give a number of weeks, then multiplied by your weekly ordinary pay. The small business exemption sets this to nil; the override replaces it entirely.
Tax-free amount. $13,598 + $6,801 × completed (whole) years, capped at the payment itself.
ETP. Anything above the tax-free amount, taxed at 17% or 32% up to the $270,000 cap and 47% above it, based on your age.
Notice and leave. Shown separately, because they're taxed under their own rules and are not part of the genuine redundancy concession.

What's not included in the tax-free amount

Unused annual leave and unused long service leave — paid out separately and taxed under their own leave rules.
Salary, wages and bonuses owed to your last day — taxed as normal income.
Payment in lieu of notice — may form part of an ETP and be treated differently.

Edge cases this doesn't model: non-genuine termination payments such as a golden handshake, where a separate whole-of-income cap of $180,000 can reduce the concessional treatment; the invalidity segment where you stop work due to permanent disability; and preservation ages below 60 for people born before 1 July 1964. To qualify for any tax-free part at all the redundancy must be genuine — your position genuinely no longer exists, you're under age-pension age, and the payment is made within 12 months of termination. When in doubt, confirm with a registered tax agent.

Entitlement source: Fair Work Ombudsman — redundancy pay and entitlements. Tax sources as above. Full method: methodology.

Frequently asked questions

How much redundancy pay am I entitled to in Australia?

Under the NES, redundancy pay runs from 4 weeks of ordinary pay at 1–2 years of continuous service up to 16 weeks at 9–10 years, then drops to 12 weeks at 10+ years because long service leave takes over. Employees with under 12 months' service, most casuals, and staff of small business employers with fewer than 15 people aren't entitled to NES redundancy pay.

Is redundancy pay tax-free in Australia?

A genuine redundancy is tax-free up to $13,598 plus $6,801 per completed year of service in 2026–27. In practice, if you're paid the NES minimum you pay no tax on it at all unless you earn more than about $235,700 a year — the tax-free limit exceeds the entitlement at every length of service below that.

How is the amount above the tax-free limit taxed?

It becomes a genuine redundancy ETP. Up to the $270,000 cap for 2026–27 it's taxed at 17% if you're 60 or older, or 32% if you're younger — both rates already include the 2% Medicare levy. Anything above the cap is taxed at 47%.

Do small businesses have to pay redundancy pay?

Generally no. A small business employer with fewer than 15 employees is exempt from NES redundancy pay, though notice of termination still applies. An award or registered agreement can still require it, so check the instrument that covers you.

Is unused annual leave part of the tax-free redundancy amount?

No. Unused annual leave and unused long service leave are paid out separately and taxed under their own rules. They're not part of the genuine redundancy tax-free amount and not part of the ETP.

How much notice am I owed on top of redundancy pay?

1 week under a year of service, 2 weeks from 1–3 years, 3 weeks from 3–5 years and 4 weeks beyond 5 years — plus an extra week if you're over 45 with at least 2 years' continuous service. Notice is separate from redundancy pay and can be paid in lieu.

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