Based on the feedback from the users, we hereby provide a list of FAQs to help our users to understand the Redundancy Payment Calculator better.
If you cannot find an answer to your question, please feel free to share your question with us and we will get back to you within 24 hours.
Yes! Your information is protected with our SSL certificate.
Yes and you are welcome to link back to our redundancy entitlement calculator by using the code below. You can click on the "Copy to Clipboard" button to copy the redundancy calculator linking code.
<p><a href="https://www.redundancypaymentcalculator.com.au" target="_blank">Redundancy Calculator</a></p>
If long service leave or annual leave is paid out upon termination of employment, superannuation contributions are not required to be made. Please refer to Work out tax to withhold and super to pay on ATO website.
If you mean the Employment Termination Payments (ETP) tax rate for people above the Preservation age (60 or older), it should be 17%. For people under preservation age (60), it should be 32.00%. However if the payment is a genuine redundancy payment and lower than the ETP tax-free limit, it will be tax free. Please read more about ETP caps on ATO website.
According to Taxation Ruling: TR 2009/2 on ATO website, an employee must be less than the pension age at the time of dismissal for a redundancy payment to qualify as a genuine redundancy payment. However, if the employment of a particular employee would have otherwise terminated at a younger age than the pension age, the employee must be dismissed before that time.
Based on the above-mentioned you are not mis-informed. Since you was made redundant at an age older than the pension age, your redundancy payment cannot be qualified as a genuine redundancy payment so you cannot have the Employment Termination Payments (ETP) tax-free limit.
The table below shows the pension age.
|Period within which a person was born||Pension age||Date pension age changes|
|From 1 July 1952 to 31 December 1953||65 years and 6 months||1 July 2017|
|From 1 January 1954 to 30 June 1955||66 years||1 July 2019|
|From 1 July 1955 to 31 December 1956||66 years and 6 months||1 July 2021|
|From 1 January 1957 onwards||67 years||1 July 2023|
A genuine redundancy payment is one "received by an employee who is dismissed from employment because the employee's position is genuinely redundant". There are four necessary components within this requirement:
Component 1 The payment being tested must be received in consequence of an employee's termination.
Component 2 That termination must involve the employee being dismissed from employment.
Component 3 That dismissal must be caused by the redundancy of the employee's position.
Component 4 The redundancy payment must be made genuinely because of a redundancy.
The satisfaction of this requirement establishes the essential character of the payment. However, there are further conditions (list below) that must also be satisfied before a payment can be treated as a genuine redundancy payment.
Condition 1 The dismissed employee is not older than specified age limits;
Condition 2 The termination is not at the end of a fixed period of employment;
Condition 3 The actual amount paid is not greater than the amount that could reasonably be expected had the parties been dealing at arm's length, in the event that the employer and employee are in fact not dealing at arm's length in relation to the dismissal;
Condition 4 There is no arrangement entered into between the employer and the employee or the employer and another entity to employ the dismissed employee after the termination; and
Condition 5 The payment is not in lieu of superannuation benefits.
Please refer to Taxation Ruling: TR 2009/2 on ATO website.
Based on the National Employment Standards (NES), the minimum notice period is listed in the table below. This applies to all employees (other than casuals), not just those covered by the national workplace relations system.
|Period of continuous service||Minimum notice period|
|1 year or less||1 week|
|More than 1 year - 3 years||2 weeks|
|More than 3 years - 5 years||3 weeks|
|More than 5 years||4 weeks|
Employees over 45 years old who have completed at least two years of service when they receive notice are given an additional week of notice.
Employees receive redundancy pay based on their continuous period of service with their employer. This amount is paid at the employee's base pay rate for ordinary hours worked. Based on the National Employment Standards (NES), the minimum redundancy pay is listed in the table below. This redundancy payment table only applies to employees covered by the national workplace relations system in Australia.
|Period of continuous service||Redundancy pay|
|At least 1 year but less than 2 years||4 weeks|
|At least 2 years but less than 3 years||6 weeks|
|At least 3 years but less than 4 years||7 weeks|
|At least 4 years but less than 5 years||8 weeks|
|At least 5 years but less than 6 years||10 weeks|
|At least 6 years but less than 7 years||11 weeks|
|At least 7 years but less than 8 years||13 weeks|
|At least 8 years but less than 9 years||14 weeks|
|At least 9 years but less than 10 years||16 weeks|
|At least 10 years||10 weeks *|
* Employees whose position is made redundant after 10 years or more of service will receive only 12 weeks' pay, to avoid 'double counting' for employees who receive pro rata long service leave entitlements. This is consistent with the 2004 Redundancy Case decision made by the Australian Industrial Relations Commission.
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