Why this tool has no state variants
Redundancy pay comes from the National Employment Standards in the Fair Work Act 2009 (Cth), s 119, and it is identical whether the business is in Geelong or Cairns. That is the opposite situation to long service leave, which is genuinely different state law, so unlike our long service leave calculator, this one doesn’t need a state picker. One national scale, one page.
The scale, and its one quirk
Redundancy pay starts after at least one year of continuous service and scales up with tenure, 4 weeks’ pay at 1–2 years, rising through the table to a peak of 16 weeks’ pay at 9–10 years. Then it does something that looks like a typo and isn’t: at 10 years and beyond, the entitlement drops back to 12 weeks. That fall is a genuine feature of s 119, not an error in this calculator, and it’s worth knowing about before anyone assumes redundancy pay just keeps climbing with loyalty.
Redundancy pay is calculated on the employee’s base rate of pay for their ordinary hours, before overtime, penalty rates, allowances, bonuses or incentive payments are added. It’s paid in addition to notice (or payment in lieu of notice) and any accrued but untaken annual leave, which are separate entitlements this tool doesn’t calculate.
Notice periods, a separate entitlement
Redundancy pay isn’t the whole story. Notice of termination, or payment instead of working it out, is a separate NES entitlement under s 117 of the Fair Work Act, and it scales with service on its own ladder: 1 week if someone’s been there a year or less, climbing to 4 weeks once they’ve done more than five years. Anyone over 45 with at least two years’ continuous service gets an extra 1 week on top of whatever the table gives them. This calculator only works out the redundancy component. Notice, and any accrued annual leave, get added separately on top when the final pay is put together, and it’s easy to under-quote the total by forgetting one of the three.
What actually counts as a redundancy
Redundancy pay only applies to a genuine redundancy, the job itself no longer needs to be done by anyone, because of a change in the business’s operational requirements, not because the person doing it wasn’t performing. A role that’s advertised again under a different title within a short period, or an employee who’s simply dismissed and replaced, isn’t a redundancy under the Fair Work Act regardless of what the paperwork calls it, and treating it as one when it isn’t creates real unfair dismissal exposure on top of getting the pay calculation wrong. There’s also a redeployment test: an employer has to have genuinely considered whether the employee could be moved into a different role in the business or an associated entity before redundancy is the right call, not just the cheapest one. The Fair Work Commission can reduce the redundancy pay below the NES scale (down to nil, in some cases) if the employer arranges other acceptable employment for the person, or increase it above the scale in limited circumstances. This calculator applies the standard scale only, not a Commission-varied figure.
What doesn’t count toward length of service
The redundancy scale runs on continuous service, and continuous service isn’t quite the same thing as time since the start date on the contract. Periods of unpaid leave generally don’t count (community service leave is the one exception), though they don’t break continuity either. Service either side of an unpaid stint still joins up as one continuous period, the gap itself just doesn’t add to the total. Fair Work’s guidance on redundancy pay, continuous service and notice periods sets this out for redundancy specifically. And anyone under twelve months with the business has no redundancy entitlement at all, regardless of how the scale would otherwise read for their tenure, because the NES sets that minimum before the scale even starts.
Redeployment: what an employer actually has to do
“We genuinely considered redeployment” has to mean more than a line in a termination letter. Before redundancy pay is even the right question, an employer needs to have actually looked at whether the person could move into a different role, in the same business or an associated entity, doing work they’re capable of with reasonable retraining. That doesn’t mean inventing a job that doesn’t exist. It does mean checking current vacancies, upcoming ones, and roles other staff are about to leave, before deciding the position simply has to go.
Skip that step and it’s not just a bigger redundancy bill at stake. A redundancy that wasn’t genuine, because redeployment wasn’t properly considered, or because the job wasn’t really abolished, exposes the employer to an unfair dismissal claim on top, which runs on a different test and a different remedy entirely. Getting the redundancy pay sum right doesn’t fix a process that was never genuine to begin with.
Who else misses out under the NES
The small business exemption below isn’t the only carve-out. Casual employees generally don’t get redundancy pay, because a casual (by definition) has no firm advance commitment to ongoing work in the first place, there’s no ongoing role to make redundant. Employees engaged for a specified period, a specified task, or a genuine season are also excluded once that period, task or season ends as expected, rather than being cut short by a change in the business. And, as covered above, anyone under twelve months’ service simply hasn’t reached the point where the NES entitlement switches on. Fair Work’s who doesn’t get redundancy pay page lists the full set. None of this stops an award, enterprise agreement or individual contract from promising more than the NES floor. Always check what’s actually been agreed before assuming the statutory minimum is the whole answer.
The small business exemption
An employer with fewer than 15 employees at the time notice of redundancy is given is a “small business employer” under the NES, and generally doesn’t have to pay redundancy pay at all. See Fair Work’s who doesn’t get redundancy pay fact sheet. Every employee of the business counts toward that number, plus employees of any associated entity, and a casual only counts if they’re employed on a regular and systematic basis. It’s a headcount test at a point in time, not a size-of-business test. A business that grows past 15 staff partway through the year can cross from exempt to liable without anyone deciding to change anything.
A handful of awards (Black Coal, Building and Construction, Joinery, Manufacturing, Plumbing and Timber among them) carry industry-specific redundancy schemes that displace the NES scale entirely. If a trade business operates under one of those awards, check it before relying on the figure above.
Reducing the amount, or increasing it
The Fair Work Commission can vary the scale in both directions, though in practice reductions come up far more often than increases. An employer can apply to have the redundancy pay reduced, down to nil in the right circumstances, if it’s found other acceptable employment for the person, whether that’s a role inside the business or one arranged with another employer entirely. “Acceptable” is judged against the old role: pay, hours, location and status all get weighed up, not just whether a job exists somewhere. The Commission can also lift the amount above the NES scale in limited circumstances, though that’s rarer. Either way, this calculator applies the standard table only. A Commission-varied figure needs its own application, not a bigger number typed into a calculator.
Tax on a genuine redundancy payment
A genuine redundancy payment gets different tax treatment to ordinary termination pay. Part of it, up to a limit that’s indexed each year and rises with years of service, is tax-free, and the rest is taxed as an employment termination payment rather than at marginal rates on top of a normal payslip. That tax-free treatment only applies to the genuine redundancy component itself, not to unused annual leave, unused leave loading, or anything already owed for work done, which are paid out and taxed separately. The ATO’s guidance on genuine redundancy payments has the current limit and the exact method. This calculator works out the NES entitlement only. What actually lands in the bank after tax is a separate calculation, best done with that figure in hand or by an accountant, particularly once the payment’s size starts nudging other thresholds like the Medicare levy surcharge.
Getting a redundancy figure wrong at the point someone loses their job is about as costly a mistake as small-business admin gets, in goodwill as much as in back-pay. If quoting, invoicing and staff records are still spread across three different tools, Delta Infotech builds the business systems that put them in one place, and the same team runs the SEO and local search and Google Ads work that keeps the business finding new work while it’s restructuring.