Redundancy Payment Calculator Australia 2026 ATO & Fair Work
Understanding your redundancy payment is critical when facing job change. Whether you're in Sydney, Melbourne, Brisbane or regional Australia, our redundancy payment calculator uses Fair Work NES scales and ATO genuine redundancy tax-free thresholds (2026) to deliver accurate estimates. Get clarity on tax on redundancy payments, statutory entitlements, and final take-home amount.
Australian Redundancy Estimator 2026
How redundancy payments are calculated in Australia (Fair Work & ATO)
Your redundancy entitlement depends on two key pillars: the National Employment Standards (NES) redundancy pay scale and the ATO's genuine redundancy tax treatment. Below we break down how to calculate redundancy payment step-by-step, including 2026 tax-free thresholds.
📌 Fair Work redundancy pay scale (weeks per completed year)
| Continuous service period | Redundancy pay (weeks) |
|---|---|
| 1 year – less than 2 years | 4 weeks |
| 2 – less than 3 years | 6 weeks |
| 3 – less than 4 years | 7 weeks |
| 4 – less than 5 years | 8 weeks |
| 5 – less than 6 years | 10 weeks |
| 6 – less than 7 years | 11 weeks |
| 7 – less than 8 years | 13 weeks |
| 8 – less than 9 years | 14 weeks |
| 9 – less than 10 years | 16 weeks |
| 10 years or more | 12 weeks* |
*Cap under NES: after 10+ years the minimum entitlement is 12 weeks, but awards or agreements may provide higher. Use our calculator for precise estimate.
💸 Genuine redundancy tax-free limit (ATO 2026 figures)
For the 2025–26 income year, the tax-free component is calculated as: Base amount $12,568 + ($6,282 × completed years of service). This amount is excluded from your assessable income. Any excess above the limit (and the whole redundancy payment if not genuine) is taxed at marginal rates. Our redundancy payment calculator ATO style applies these numbers automatically.
$0–$18,200: 0%
$18,201–$45,000: 16%
$45,001–$135,000: 30%
$135,001–$190,000: 37%
$190,001+: 45%
+2% Medicare levy
📝 Example: calculating redundancy payment for a Victorian employee
Case: Weekly pay $2,200, 8.2 years service, genuine redundancy, $3,500 annual leave payout. NES weeks: 14 weeks (8–9 years bracket). Gross redundancy = 14 × $2,200 = $30,800. Tax-free limit = $12,568 + ($6,282×8) = $12,568 + $50,256 = $62,824 → entire $30,800 tax-free. Taxable only annual leave $3,500 taxed at marginal rate (~$610 tax). Net payout ~$33,690. Our calculator above replicates similar logic.
Tax on redundancy payments: what changes in 2026?
Unlike previous years, the ATO has indexed the tax-free base amount and the service amount for inflation. The tax on redundancy payments calculator must reflect $12,568 base + $6,282 per year. Also note that payment in lieu of notice (PILON) is generally treated as ordinary income and doesn’t qualify for the tax-free concession. Our tool distinguishes genuine redundancy vs other termination payments. If you're in NSW, Victoria, QLD, WA, SA, or ACT — the federal NES applies uniformly across Australia.
Voluntary redundancy packages are typically still “genuine redundancy” for tax purposes if the role is no longer required. However, if you receive an ex-gratia redundancy payment not linked to genuine redundancy, the full amount becomes taxable. Always request a formal letter from employer confirming genuine redundancy status to secure the ATO tax-free cap.
🔍 How to calculate redundancy payment – step-by-step checklist
- Step 1: Determine your completed years of continuous service (including part-time service counted as full-time equivalence).
- Step 2: Identify NES redundancy weeks using the official table above.
- Step 3: Multiply weekly base rate of pay (ordinary rate) by redundancy weeks → Gross redundancy entitlement.
- Step 4: Verify if redundancy is “genuine” – if yes, apply tax-free limit = $12,568 + ($6,282 × full years).
- Step 5: Add any unused annual leave, long service leave (paid out separately).
- Step 6: Calculate tax on taxable component using marginal rates + Medicare levy (2%).
State-specific nuances: NSW, Victoria, Queensland & WA
While the NES applies nationally, some state public sector employees or specific awards may provide extra benefits. For instance, redundancy payment calculator NSW for government workers might include additional separation benefits. Similarly, redundancy payment calculator Victoria follows the same federal framework but long service leave legislation differs slightly (Victoria has portable LSL). Our tool incorporates general redundancy entitlements; always cross-check with your contract.
🎯 What about employees with less than 12 months?
Employees with less than one year of service are not entitled to redundancy pay under NES unless an award/agreement states otherwise. However, they may still receive payment in lieu of notice (PILON) which is fully taxable as ordinary income.
Frequently asked questions – redundancy payment Australia
The tax-free portion (based on years of service) is excluded. The remaining amount (if any) plus annual leave and LSL is added to your income and taxed at normal marginal rates + Medicare levy.
Yes. Our calculator uses the Australian Fair Work NES and ATO guidelines, which are consistent across all states and territories.
The cap depends on years of service: e.g., 10 years = $12,568 + (10×$6,282) = $75,388. Amounts above that become taxable.
No, if the voluntary redundancy meets the “genuine redundancy” definition (job abolished), it receives the same tax-free treatment. If it’s a “golden handshake” not linked to role elimination, it’s fully taxable.
Your weekly pay is based on your part-time ordinary rate; years of service count as calendar length (not full-time equivalent). The calculator uses ordinary weekly pay – that's the correct method.
It provides a strong estimate under NES, but some public sector awards offer enhanced benefits. Consult your employer agreement for exact figures.
This redundancy payment calculator and content are for informational purposes only and do not constitute financial or legal advice. Actual redundancy entitlements may vary based on individual employment contracts, awards, and ATO rulings. Always consult a qualified tax professional, financial adviser, or the Fair Work Ombudsman. TotalCalcHub is not liable for any decisions made based on these estimates. Updated for 2026 Australian tax rates and NES thresholds.