Redundancy Calculator
Your redundancy payout after tax: the tax-free part, tax on the rest, and unused leave. FY 2026-27.
After 8 years' service the NES minimum is 14 weeks' pay: $24,231 on a $90,000 salary. On a genuine redundancy in 2026-27 up to $68,006 is tax-free ($13,598 + 8 × $6,801), so all of it is tax-free. Add 4 weeks of unused annual leave ($6,923, taxed $2,215) and about $28,939 lands in your account.
Your situation
Your job was abolished and you were dismissed before age pension age (67). Part of the payment is tax-free.
Your payout
Leave is taxed using your 30% tax rate on a $90,000 salary (plus Medicare), capped at 32% on a genuine redundancy.
$24,231 of your severance is completely tax-free (cap: $68,006 for 8 years of service).
Full breakdown
Insights
- •Your payout could last about 9 months at 60% of your current spending.
- •Not a licensed advisor. Consult one for big decisions.
Rates checked September 2026 against the ATO and the Fair Work Ombudsman.
Redundancy pay under the NES (years of service table)
The National Employment Standards (NES) set a minimum redundancy payment based on your continuous service with the employer. It's paid at your base rate of pay for your ordinary hours, so overtime, penalty rates and most allowances aren't included.
Employers working out what they owe can multiply the employee's weekly base pay by the weeks below, then add notice (or pay in lieu of notice) and any unused leave.
- Less than 1 year: nil
- 1 to less than 2 years: 4 weeks
- 2 to less than 3 years: 6 weeks
- 3 to less than 4 years: 7 weeks
- 4 to less than 5 years: 8 weeks
- 5 to less than 6 years: 10 weeks
- 6 to less than 7 years: 11 weeks
- 7 to less than 8 years: 13 weeks
- 8 to less than 9 years: 14 weeks
- 9 to less than 10 years: 16 weeks
- 10 years or more: 12 weeks (it drops because long service leave usually kicks in)
Who doesn't get NES redundancy pay
Small business employers with fewer than 15 employees don't have to pay NES redundancy pay, unless an award or agreement says otherwise. The exemption doesn't apply where a larger business has downsized below 15 and is bankrupt or in liquidation.
Casuals, apprentices, trainees, people on fixed-term or project contracts, and people dismissed for serious misconduct are also excluded. Many awards, enterprise agreements and contracts pay more than the NES minimum, so check yours. The calculator works out the NES minimum for you, or you can switch to "My offer" and enter the amount you've actually been offered.
Genuine redundancy tax-free amount for 2026-27
If your redundancy is genuine, part of the payment is completely tax-free. For 2026-27 the limit is $13,598 plus $6,801 for each completed year of service. Only whole years count: 7 years and 11 months counts as 7.
- 5 years: $47,603 tax-free
- 8 years: $68,006 tax-free
- 10 years: $81,608 tax-free
- 20 years: $149,618 tax-free
What makes a redundancy genuine
Your job must be abolished and you must be dismissed before reaching age pension age. The payment must be at arm's length and more than you'd get if you'd resigned. There must also be no agreement to employ you again. A voluntary redundancy can still be genuine.
The tax-free limit covers the severance payment, payment in lieu of notice and any gratuity. It doesn't cover unused annual leave, long service leave or wages owed. If the redundancy isn't genuine, there's no tax-free amount and the whole payment is taxed as an ETP.
You're also entitled to notice, or pay in lieu of notice. The NES minimum is 1 week for up to 1 year's service, 2 weeks for 1 to 3 years, 3 weeks for 3 to 5 years and 4 weeks for more than 5 years. Add a week if you're over 45 and have at least 2 years' service. Your award or contract may set a longer period.
Redundancy tax: ETP rates and the 2026-27 cap
Anything above the tax-free limit is an employment termination payment (ETP). It's taxed at 32% (30% plus Medicare levy) if you're under preservation age, which is 60, or 17% if you're 60 or older. These rates apply up to the ETP cap of $270,000 for 2026-27. Anything above the cap is taxed at 47%.
For a genuine redundancy only the ETP cap applies. For other termination payments the cap is the smaller of $270,000 and the $180,000 whole-of-income cap, reduced by your other taxable income for the year.
Unused annual leave and leave loading paid on a genuine redundancy are taxed at no more than 32%. Long service leave accrued since 16 August 1978 is also capped at 32%. If you resign or are dismissed, unused leave is usually taxed at your normal rates.
Ask your employer for a written breakdown showing the redundancy payment, notice, annual leave and long service leave separately, and check the years of service and weekly pay used. If too much tax is withheld, you get the difference back when you lodge your tax return.
Worked example: 12 years' service
Say you're 52, earn $120,000, have 12 completed years' service and are offered a $150,000 genuine redundancy package, with 6 weeks of annual leave and 10 weeks of long service leave owing. With "My offer" set to $150,000, the calculator shows:
- Tax-free: $95,210 ($13,598 + 12 × $6,801)
- Taxable ETP: $54,790, taxed at 32% = $17,533
- Annual leave: $13,846, tax $4,431
- Long service leave: $23,077, tax $7,385
- Total: $186,923 before tax, $29,348 tax, $157,575 in your account
- At age 60 or older the ETP tax drops to $9,314 and you'd get $165,793
Frequently asked questions
$13,598 plus $6,801 for each completed year of service. For 10 years that's $81,608 tax-free.
On a genuine redundancy, the payment is tax-free up to the limit. The rest is taxed as an ETP at 32% if you're under 60 or 17% if you're 60 or older, up to the $270,000 cap. Unused annual leave and long service leave are taxed at no more than 32%.
Under the NES it's 4 weeks after 1 year, rising to 16 weeks at 9 years, then 12 weeks from 10 years. Your award, agreement or contract may give you more.
Not under the NES if they have fewer than 15 employees, unless an award or agreement says otherwise. The exemption doesn't apply where a larger business has downsized below 15 and is bankrupt or in liquidation.
No. Unused annual leave, leave loading and long service leave are paid on top of your redundancy but taxed separately, at no more than 32% on a genuine redundancy.
Yes. Your employer must give notice or pay in lieu of it: 1 to 4 weeks depending on service, plus a week if you're over 45 with at least 2 years' service. Pay in lieu of notice counts towards the tax-free limit on a genuine redundancy.
It can. Services Australia may apply a liquid assets waiting period of up to 13 weeks, and leave paid out can delay payments like JobSeeker.