A worked example
Sarah has worked as a full-time administrative assistant for a Sydney marketing firm for 6.5 years. Her employer makes her role redundant in October 2025. She earns $72,000 per annum and is covered by the Fair Work Act with no enterprise agreement that changes redundancy provisions.
Under the Fair Work Act redundancy scale, an employee with 'at least 6 but less than 7 years' of continuous service gets 11 weeks of redundancy pay. Her weekly pay is $72,000 ÷ 52 = $1,384.62.
Sarah's minimum redundancy pay entitlement is therefore 11 weeks × $1,384.62 = $15,230.82. This is in addition to any accrued annual leave (she has 3 weeks remaining, worth $4,153.86) and any long service leave she's entitled to (none, as NSW only gives pro-rata LSL after 5 years in limited circumstances and a full entitlement at 10 years). Her total separation payout is around $19,400 before tax, plus her final pay period wages and any accrued RDOs.
State-by-state differences
- All states and territories: The Fair Work Act sets the national minimum redundancy pay scale for most employees. The formula doesn't change by state, but state-based long service leave entitlements do. NSW, VIC, QLD, WA, SA and ACT require 10 years for long service leave (pro-rata after 7 years in some states). TAS requires 10 years. NT requires 7 years.
- Award variations: Some modern awards provide more generous redundancy than the Fair Work Act minimum. The Manufacturing and Associated Industries Award, for example, may have different scales. Always check your specific award or enterprise agreement.
- Small business exemption: Employers with fewer than 15 employees at the time of redundancy don't have to pay redundancy pay under the Fair Work Act, regardless of which state you're in. This is a headcount test, not a state rule.
- Public sector: State government employees in NSW, VIC, QLD and other states are often covered by state industrial relations systems, not the Fair Work Act. Redundancy provisions can be significantly more generous, particularly for long-serving employees.
Common mistakes people make
- Confusing notice pay with redundancy pay: Many people think redundancy pay is the same as notice pay. They're separate entitlements. You get both. Notice pay (or payment in lieu) covers the notice period your employer should have given you. Redundancy pay is a separate severance payment based on years of service. If you have 5 years of service, you're entitled to 10 weeks of redundancy pay plus your notice period (usually 2-4 weeks).
- Assuming all small businesses must pay redundancy: If your employer has fewer than 15 employees at redundancy time, they don't have to pay redundancy under the Fair Work Act. People often assume it's automatic. Check the headcount across the whole business, not just your location or department.
- Not counting casuals correctly: Casual employees can be entitled to redundancy pay if they've worked regular and systematic hours for at least 12 months and had a reasonable expectation of ongoing work. Many casuals assume they get nothing and don't claim what they're owed.
- Thinking the calculator shows take-home pay: Redundancy pay is taxable income, though it may qualify for concessional tax treatment under Employment Termination Payment (ETP) rules. For 2025-26 the tax-free base amount is $13,100, plus $6,552 per complete year of service. Anything above that threshold is taxed under the ETP rules at concessional rates up to the ETP cap. Don't spend it all before you see your payslip.
What this calculator doesn't account for
This calculator shows your minimum redundancy pay under the Fair Work Act based on continuous service. It does not account for enterprise agreements or awards that provide more generous redundancy scales, which are relatively common in industries like manufacturing, construction and healthcare.
The calculator doesn't factor in taxation. Redundancy payments are taxed differently to normal wages under Employment Termination Payment rules, with tax-free and concessional components depending on your years of service and total payment amount. See the ATO for ETP tax calculations.
It won't capture employer-specific redundancy policies. Many larger employers offer redundancy packages well above the statutory minimum, sometimes 2-3 weeks per year of service instead of the Fair Work scale.
The calculator assumes you're a permanent employee covered by the Fair Work system. It doesn't cover casuals (unless they meet the regular and systematic test), contractors, state public servants, or employees under state industrial systems.
Edge cases and nuances
- Redundancy during paid parental leave: If you're made redundant while on government-funded Parental Leave Pay or while on unpaid parental leave, your redundancy entitlement is still calculated on your pre-leave salary and your service continues to accrue. Fair Work Act section 123 protects you. Your employer can't reduce your redundancy because you've been on leave.
- Transfer of business: If your employer sells the business and you continue working for the new owner, your service usually transfers. You don't get redundancy pay at the transfer point. But if the new owner makes you redundant a year later, your service with the old employer counts towards the redundancy calculation under Fair Work Act section 22.
- Job offered and refused: If your employer offers you another suitable job and you refuse it, they may not have to pay redundancy. 'Suitable' is tested against role, location, salary and conditions. A warehouse worker in Melbourne can refuse a similar role in Brisbane and still claim redundancy. The same role 5km away is harder to refuse.
- Redundancy over the ETP cap: For 2025-26, the tax-free redundancy amount is $13,100 plus $6,552 per complete year of service. Above that, concessional tax rates apply up to the ETP cap ($260,000 in 2025-26). Payments above the cap are taxed at your marginal rate plus Medicare levy. High earners with long service can be surprised by the tax bill.
