Redundancy Pay Calculator

Redundancy pay entitlements in Australia

When an employer no longer requires an employee's job to be done by anyone, the employee may be entitled to redundancy pay under the National Employment Standards (NES). The amount depends on the employee's period of continuous service and their base rate of pay for ordinary hours worked - overtime, incentive payments, and bonuses are excluded from this calculation.

The NES redundancy scale ranges from 4 weeks' pay (for 1-2 years of service) up to 16 weeks' pay (for 9-10 years), then reduces to 12 weeks for employees with 10 or more years of service. Small businesses with fewer than 15 employees are exempt from paying redundancy under the NES, though applicable awards or enterprise agreements may still require it.

How to use this redundancy pay calculator

1. Enter the employee's start date and termination date to calculate their continuous period of service.
2. Enter the employee's base weekly pay rate (ordinary hours only - exclude overtime, bonuses, and allowances).
3. Select whether the employee is aged 45 or over with at least 2 years of service, which adds an extra week to the notice period.
4. Review the breakdown showing redundancy pay weeks, notice period entitlement, and total termination payout including any accrued leave balances.

NES redundancy scale and Fair Work obligations

In addition to redundancy pay, employees are entitled to a minimum notice period (or payment in lieu of notice) ranging from 1 to 4 weeks depending on tenure, with an extra week for employees aged 45 or over with at least 2 years of service. Any accrued but untaken annual leave must be paid out at the employee's current rate, and long service leave is payable if the employee has reached the pro-rata threshold in their state. The Fair Work Commission can reduce redundancy pay if the employer finds suitable alternative employment for the employee or if the employer cannot afford the full amount. Employers must also consult with affected employees and their representatives before making positions redundant - failure to consult can result in the redundancy being found to be unfair. The ATO taxes redundancy payments concessionally: a tax-free component applies (based on years of service), with the remainder taxed at concessional rates up to a defined cap.

Industry-specific redundancy schemes

Several Australian industries have portable redundancy schemes that operate alongside the NES. The building and construction industry has ACIRT, BERT (QLD), and similar state-based funds where employers contribute a set amount per employee per week. The coal mining industry has its own redundancy provisions under the Black Coal Mining Industry Award. These schemes provide redundancy benefits even when employees move between employers within the industry. If your business operates under one of these schemes, the NES redundancy entitlement may be reduced by the amount available from the portable fund.

Managing termination costs with better AP processes

Redundancy payments represent a significant, often unplanned cash outflow. Businesses that automate their accounts payable have better visibility over cash flow forecasting, making it easier to budget for termination entitlements when restructuring is necessary. With real-time financial data, management can model the cost of redundancies before making final decisions.