This Calculator is developed for Australians to estimate their possible redundancy payment entitlements, tax on redundancy payout, and net after tax redundancy pay.
This Calculator is based on the publicly available guidelines and publications about redundancy payment that can be found in the Notice of Termination & Redundancy Pay guide based on National Employment Standards (NES) from Fair Work Ombudsman and the Taxation of Termination Payments guide from Australian Taxation Office (ATO). The rates that take effect on 01/07/2023 for Financial Year 2024 (FY24) are being used. The results from this calculator are only indicative and informative. The estimation will be based on the information you provide. If any information provided is inaccurate, the estimation will could be incorrect. It is recommended that you seek independent financial advice on this matter and further information regarding taxation can be found at the Australian Taxation Office website at www.ato.gov.au.
This free redundancy payments calculator was developed based on that fact that employees should get the following entitlements in their final pay:
Genuine redundancy payments are tax-free up to a limit. The tax-free limit depends on the number of years you work for the employer paying the redundancy. Genuine redundancy payments above the tax-free limit are included in employment termination payments (ETPs) which are concessionally taxed. More information can be found on the ATO website about Redundancy payments.
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PLEASE NOTE: We are NOT affiliated with any Government department or organisation! If you have any questions regarding your redundancy pay and entitlement, please phone Fair Work Ombudsman on 13 13 94 (8:00am – 5:30pm, Monday to Friday, except for public holidays).
| Summary | Amount |
|---|---|
| Total Gross Package | $0.00 |
| Total Tax | $0.00 |
| Total After Tax Net Payments | $0.00 |
| Total Superannuation | $0.00 |
If you need an Excel redundancy calculator, you can download a free one here. You need to enable macros in order to use the Excel redundancy calculator. If you need to customise the Excel redundancy calculator or have any questions, please feel free to contact us.
According to the Fair Work Ombudsman, a genuine redundancy is when:
When an employee's dismissal is a genuine redundancy the employee isn't able to make an unfair dismissal claim.
A genuine redundancy payment is a payment made to you as an employee if your job is abolished and you no longer have a job. This means your employer has made a decision that your job no longer exists, and your employment is to be terminated.
Your genuine redundancy payment is:
The tax-free amount of a genuine redundancy is not part of the ETP. Your employer will report any lump sum amounts on your income statement or PAYG payment summary – individual non-business.
Any amount over the tax-free limit is part of the employee's ETP.
A redundancy may not always be a genuine redundancy. A non-genuine redundancy occurs when as an employee:
You pay tax on a non-genuine redundancy as part of your ETP. This means, you generally pay tax at a lower rate than your normal income, if the payment doesn't exceed certain caps (the ETP cap and/or the whole-of-income cap).
Depending on your employment conditions, a genuine redundancy payment may include:
Any payments that meet the conditions of a genuine redundancy are tax-free up to a limit depending on your years of service with your employer.
The tax-free limit is a whole dollar amount plus an amount for each year of service you complete in your period of employment with your employer. Indexation changes the tax-free limit on 1 July each year.
Your employer will report the tax-free amount as a lump sum on your income statement or PAYG payment summary – individual non-business.
A lot of people think the above payments are always treated as genuine redundancy payments. This is not true. It depends on your workplace agreement. If under your workplace agreement those payments are payable on all types of termination of employment (including voluntary termination) but not limited to redundancy they should NOT be treated as genuine redundancy payments. If those payments are payable only for redundancy they should be treated as genuine redundancy payments. To put it simply, only payments are in excess of what was reasonably expected to be paid for a voluntary termination will be seen as genuine redundancy payments. The ATO website has a very clear and detailed explanation of how those payments should be classified in the Single ETP with excluded and non-excluded parts, and unused leave payments example as shown below.
Example: Single ETP with excluded and non-excluded parts, and unused leave payments
After five years' service, Alec, who is 30 years old, is made redundant from his place of work in 2020–21 and receives the following payments in his termination pay:
- redundancy pay – $35,000.00
- unused sick leave – $6,247.00
- payment in lieu of notice – $1,723.42
- unused annual leave – $5,234.17
- unused long service leave – $11,423.91
- gratuity – $25,000.00.
Under Alec's workplace agreement, payment in lieu of notice, and the gratuity, are payable on termination of employment – this means they are paid for any type of departure, including voluntary termination. Alec's employer has contacted us and confirmed that his redundancy meets the conditions of a genuine redundancy – this means the redundancy payment and unused sick leave payment are in excess of what was reasonably expected to be paid for a voluntary termination.
The redundancy payment and unused sick leave payment are excluded payments and the ETP cap applies. The payment in lieu of notice and gratuity are non-excluded payments, and the lesser of the ETP cap and whole-of-income cap applies.
In the example above the redundancy payment and unused sick leave qualify as genuine redundancy payments. The payment in lieu of notice and gratuity are not genuine redundancy payments.
The following payments are excluded from a genuine redundancy payment:
You can read more about redundancy payment on the Fair Work Ombudsman website and Australian Taxation Office website.
If you are not sure what should be included as Employment Termination Payments (ETPs), you can use the table below to work out which payments to include in the your ETP.
Payments included in ETPs |
Payments not included in ETPs |
|---|---|
A gratuity or golden handshake |
Accrued leave payments for unused annual leave and long service leave |
Genuine redundancy or early retirement scheme payments above the tax-free limit |
Genuine redundancy or early retirement scheme payments up to the tax-free limit |
Severance pay |
Salary, wages, allowances, bonuses and incentives owing to the employee for work done or leave already taken |
Non-genuine redundancy payments |
Super benefits (for example, a lump sum or income stream from a super fund) |
Payments in lieu of notice of termination |
Foreign termination payments |
Unused rostered days off (RDOs) |
Certain payments for restraint of trade |
Unused sick leave |
Certain payments for personal injury if the employee is compensated for their inability to be employed |
Compensation for loss of job |
Employee share scheme payments |
Compensation for wrongful dismissal, as long as it is paid within 12 months of the actual termination of employment |
An advance or loan |
Payments for loss of future super payments |
N/A |
Payments arising from an employee's termination because of ill health (invalidity), other than compensation for personal injury |
N/A |
Lump sum payments paid on the death of an employee |
N/A |
To receive concessional tax treatment, an ETP must generally be paid within 12 months of termination.
Payments outside the 12-month period are included in the recipient's assessable income and taxed at their marginal tax rates.
The 12-month rule does not apply to the taxable component of genuine redundancy payments and early retirement scheme payments.
A payment that is made more than 12 months after termination can still be treated as an ETP in any of the following circumstances:
You can find more about the 12-month rule on ETP 2018/1 Income Tax Employment Termination Payments (12 month rule) Determination 2018.