Redundancy Pay Calculator

Calculate Your Redundancy Payment

This redundancy calculator uses the NES redundancy pay scale under s.119 of the Fair Work Act 2009. Enter the employee's base salary or weekly wage rate and their years of continuous service to calculate the minimum redundancy entitlement. Modern awards or enterprise agreements may provide for higher amounts; always check the applicable instrument.

How Redundancy Pay Applies Under the National Employment Standards

The NES sets minimum redundancy pay entitlements based on an employee's period of employment. The scale runs from four weeks at one year of service to a peak of 16 weeks at nine-to-ten years, before reducing to 12 weeks for those with ten or more years.

This reduction at the ten-year mark accounts for the fact that employees with ten or more years of service typically have long service leave entitlements to draw on at termination under the applicable state legislation, which was not the case for employees with shorter tenure at the time the NES scale was set. For a full reference table with worked examples, see the NES Redundancy Table on the blog. Refer to the Fair Work Ombudsman redundancy pay guidance for the current entitlement scale.

Small business employers with fewer than 15 employees at the time of dismissal are exempt from NES redundancy pay obligations. The Fair Work Act defines a small business employer under s.23. This exemption applies to the employer's total headcount, not the headcount of a particular location or division. Small business employers are still required to provide notice of termination or payment in lieu of notice under s.117 of the Fair Work Act.

For a redundancy to be genuine, the employee's position must no longer be required and the job must be abolished rather than filled by someone else. The employer must also have complied with any formal consultation obligations under the applicable modern award or enterprise agreement. Failure to consult where a modern award or enterprise agreement requires it means the dismissal is not a genuine redundancy under s.389(1)(b) of the Fair Work Act. The employer loses the genuine-redundancy defence to any unfair dismissal claim. Whether the dismissal is ultimately found to be unfair then depends on the full s.387 criteria, but the employer's position is materially weaker. A voluntary redundancy, where the employee agrees to leave, must still meet the conditions of a genuine redundancy to attract concessional tax treatment.

Genuine redundancy payments receive concessional tax treatment and are tax-free up to a limit calculated by the Australian Taxation Office based on the employee's completed years of service. Employees do not pay tax on amounts below this threshold, but any excess forms part of an employment termination payment and may attract a different rate. The tax-free limit is updated annually. Employers should direct employees to the Australian Taxation Office for current thresholds. Early retirement scheme payments may also receive similar tax treatment in certain circumstances.

Redundancy pay is separate from other final entitlements. Employees who are made redundant remain entitled to payment of any unused annual leave, unused long service leave where applicable under state legislation, and any notice period or payment in lieu of notice. These amounts should be calculated independently using the employee's base pay rate.

When This Redundancy Pay Calculator May Not Apply

This redundancy pay calculator provides NES minimum entitlements only. If the employee is covered by a modern award, registered agreement, or enterprise agreement that provides higher redundancy pay or additional compensation, the higher amount applies. Some agreements also include additional entitlements such as redeployment periods, outplacement support, or enhanced severance.

If your business in Australia is managing a redundancy process and you need guidance on consultation requirements, genuine redundancy criteria, or how to structure the separation, view the employee management services or read the comprehensive redundancy guide on the blog.

You may also find the Notice Period Calculator useful when calculating the total separation cost, as notice period entitlements apply in addition to redundancy pay.

Explore all free HR tools and practical guides on the blog.