Is unused annual leave taxed differently if I resign vs am made redundant?

Yes. If you resign, retire or are dismissed for inefficiency, unused annual leave accrued after 17 August 1993 is added to your income and taxed at marginal rates. If you are made genuinely redundant, all unused annual leave is taxed at a flat 32% (which includes the 2% Medicare levy). This is set by ATO Schedule 7.

How much of my redundancy payment is tax-free?

For FY 2025-26 the tax-free amount on a genuine redundancy is $13,100 plus $6,552 for each complete year of service. So 5 years' service gives $13,100 + $32,760 = $45,860 tax-free. Anything above that becomes an ETP and is taxed at concessional rates up to the ETP cap of $260,000. The thresholds are indexed each February.

Does this calculator cover non-genuine redundancy and golden handshakes?

Yes. Choose 'Resignation / retirement' and enter the lump sum in the gratuity field. It becomes an ETP under ATO Schedule 11: For non-genuine redundancy, golden handshakes and severance paid outside the NES, both the ETP cap ($260,000) and the whole-of-income cap ($180,000 minus your other taxable income) apply. The smaller cap wins.

Do I get notice and redundancy pay if I resign?

No. Notice of termination and NES redundancy pay are obligations on the employer when they end your employment. If you resign, you are owed only unpaid wages, accrued annual leave, accrued leave loading (where applicable), and long service leave per your state Act. Your employment contract may require you to give notice to your employer.

What does this calculator not cover?

Leave accrued before 18 August 1993 (rare, taxed at a different rate), long service leave accrued before 16 August 1978 (only 5% counted as income), invalidity and death-benefit ETPs, foreign-resident apportionment, and award or enterprise-agreement entitlements above the NES minimums. Check your award or agreement and see ATO Schedule 7 and 11 for the full rules.

Calculator · FY 2026-27 · NES + ATO Schedule 7 & 11

Australian Termination Pay Calculator

Work out final pay on resignation, retirement or genuine redundancy. The tool applies the NES weeks for notice and severance, then taxes each component at the right rate: marginal for unused leave on resignation, flat 32% for unused leave on redundancy, and the ETP rules for gratuities and lump sums.

Reason for leaving Sets which tax schedule applies redundancy unlocks the tax-free portion + flat 32% on leave

Weekly base pay (gross AUD) Ordinary hours only, no overtime or bonuses $78,000 salary ÷ 52 ≈ $1,500/week

Completed years of service Whole years, used for NES + tax-free formula 10 or more years all pay a flat 12 redundancy weeks under the s.119 scale, so the figure stops moving there

Your age at termination Affects notice uplift and ETP rate 45+ adds 1 week notice; 60+ unlocks 17% ETP rate

Unused annual leave (hours) Hours owed on your final payslip 2 weeks = 76 hours at 38 hr/week

Other taxable income this FY (AUD) YTD salary + any other income before this final pay used for marginal-rate and whole-of-income cap calcs

Show advanced options

Unused long service leave (hours) Post-17 Aug 1993 accrual only 3 months LSL = ~494 hours at 38 hr/week

Gratuity / golden handshake / extra severance (AUD) Any termination pay above NES minimums often offered with non-genuine redundancies

Standard hours per week Used to convert leave hours to weekly pay full-time = 38; part-time set to your contract hours

Annual leave loading (%) Award loading paid on unused AL at termination 17.5% is common in retail / manufacturing awards

Unpaid wages owed (AUD) Hours worked in the final pay period last week worked, not yet paid

Financial year Sets which ETP cap and tax-free formula applies 2025-26 unless you finished before 1 July 2025

Include NES minimum notice as pay in lieu (if employer cut you loose immediately)

Apply 2% Medicare levy on marginal-rate components

Calculations run in your browser. Nothing is sent.

Sources applied

NES notice of termination · Fair Work Act 2009 s.117 · 1 to 4 weeks by length of service plus 1 week if aged 45+ with 2+ years service
NES redundancy pay · Fair Work Act 2009 s.119 · 4 to 16 weeks scale, drops to 12 weeks at 10+ years (long service leave kicks in)
Unused leave on termination · ATO Schedule 7 · marginal rates on normal termination; flat 32% on genuine redundancy
Genuine redundancy tax-free · ITAA 1997 s.83-170 · FY 2025-26 base $13,100 + $6,552 per completed year
Employment termination payments (ETP) · ATO Schedule 11 · ETP cap $260,000 (2025-26); preservation age 60 unlocks 17% rate
Whole-of-income cap · ITAA 1997 s.82-10 · $180,000 (not indexed), applies to non-redundancy ETPs only
Brackets · ATO FY 2025-26 · 0/16/30/37/45% at $18,200 / $45,000 / $135,000 / $190,000

Verified against fairwork.gov.au · ato.gov.au · ITAA 1997

How the calculation works

Step 1: list what you're owed: Unpaid wages for hours worked, unused annual leave hours, unused long service leave hours, NES notice (paid in lieu if the employer cuts you off immediately), NES redundancy weeks if applicable, and any gratuity or golden handshake on top.
Step 2: convert hours to dollars: Leave hours times your hourly rate (weekly pay divided by your standard hours). Annual leave loading is added if your award pays it on termination, which the NES requires unless overridden.
Step 3: apply the NES weeks: Redundancy weeks come from the s.119 scale (4 to 16 weeks based on service). At 10+ years it drops to 12 weeks because long service leave kicks in. Notice comes from the s.117 scale (1 to 4 weeks by service, plus 1 week if you're 45+ with 2+ years service).
Step 4: tax the leave under ATO Schedule 7: For resignation, retirement and normal termination, unused annual leave and long service leave accrued after 17 August 1993 are added to your income and taxed at marginal rates. For genuine redundancy, all of it is taxed at flat 32% (which already includes the 2% Medicare levy).
Step 5: apply the redundancy tax-free portion: If genuine redundancy, the first $13,100 + $6,552 per completed year is tax-free (FY 2025-26). It's applied to the redundancy and gratuity components, not to leave.
Step 6: tax the rest as an ETP: Anything left over after the tax-free portion is an Employment Termination Payment. Below age 60: 32% (includes Medicare). At or above 60: 17%. Above the ETP cap: 47%. For non-redundancy ETPs, the whole-of-income cap ($180,000 minus your other taxable income this year) also applies and the smaller cap wins.

Frequently asked

Is unused annual leave taxed differently if I resign vs am made redundant?: Yes. If you resign, retire or are dismissed for inefficiency, unused annual leave accrued after 17 August 1993 is added to your income and taxed at marginal rates. If you are made genuinely redundant, all unused annual leave is taxed at a flat 32% (which includes the 2% Medicare levy). This is set by ATO Schedule 7.
How much of my redundancy payment is tax-free?: For FY 2025-26 the tax-free amount on a genuine redundancy is $13,100 plus $6,552 for each complete year of service. So 5 years' service gives $13,100 + $32,760 = $45,860 tax-free. Anything above that becomes an ETP and is taxed at concessional rates up to the ETP cap of $260,000. The thresholds are indexed each February.
Does this calculator cover non-genuine redundancy and golden handshakes?: Yes. Choose 'Resignation / retirement' and enter the lump sum in the gratuity field. It becomes an ETP under ATO Schedule 11: For non-genuine redundancy, golden handshakes and severance paid outside the NES, both the ETP cap ($260,000) and the whole-of-income cap ($180,000 minus your other taxable income) apply. The smaller cap wins.
Do I get notice and redundancy pay if I resign?: No. Notice of termination and NES redundancy pay are obligations on the employer when they end your employment. If you resign, you are owed only unpaid wages, accrued annual leave, accrued leave loading (where applicable), and long service leave per your state Act. Your employment contract may require you to give notice to your employer.
What does this calculator not cover?: Leave accrued before 18 August 1993 (rare, taxed at a different rate), long service leave accrued before 16 August 1978 (only 5% counted as income), invalidity and death-benefit ETPs, foreign-resident apportionment, and award or enterprise-agreement entitlements above the NES minimums. Check your award or agreement and see ATO Schedule 7 and 11 for the full rules.

Australian Termination Pay Calculator

How the calculation works

Frequently asked

Related calculators