Question 1

What are the NES redundancy entitlements in Australia?

Accepted Answer

Under the National Employment Standards (NES), redundancy pay is based on years of continuous service. Employees with 1-2 years get 4 weeks, 2-3 years get 6 weeks, 3-4 years get 7 weeks, 4-5 years get 8 weeks, 5-6 years get 10 weeks, 6-7 years get 11 weeks, 7-8 years get 13 weeks, 8-9 years get 14 weeks, 9-10 years get 16 weeks, and 10+ years get 12 weeks. Employees with less than 12 months of service are generally not entitled to redundancy pay.

Question 2

What is the tax-free amount for a genuine redundancy?

Accepted Answer

If your redundancy is classified as a genuine redundancy, part of your payment is tax-free. The tax-free limit is a base amount plus an additional amount for each completed year of service. These amounts are updated annually by the ATO. The tax-free component only applies to the redundancy payment itself, not to leave payouts or other entitlements.

Question 3

How are Employment Termination Payments (ETPs) taxed?

Accepted Answer

ETPs are amounts paid as a result of termination of employment, beyond NES entitlements. They are taxed at concessional rates up to certain caps. The tax rate depends on whether the payment is above or below the ETP cap, your age (under or over preservation age), and the components of the payment (tax-free, concessional, and top marginal rate components).

Question 4

How are unused leave payouts taxed on redundancy?

Accepted Answer

Unused annual leave and long service leave paid on redundancy are taxed at specific rates. Annual leave accrued after 17 August 1993 is taxed at your marginal rate. Long service leave has different tax treatment depending on when it was accrued. Leave loading may also be payable on annual leave depending on your award or agreement.

Component	Amount
NES Redundancy Pay (10 weeks)	$16,346
Annual Leave Payout	$4,904
Leave Loading	$858
Gross Payout	$22,108
Tax-Free Amount	-$16,346
Taxable Amount	$0
Estimated Tax	-$1,844
Estimated Net Payout	$20,264

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