Severance Pay Calculator: After Tax, by Country

How to Use the Severance Pay Calculator

Severance Pay by Country: Key Rules

🇿🇦 South Africa

Minimum 1 week per completed year of service under section 41 of the Basic Conditions of Employment Act (BCEA). The first R550,000 of a severance lump sum is exempt from income tax, subject to a lifetime cap that also applies to retirement fund lump sums. UIF benefits provide additional income protection for up to 12 months.

South African employees facing retrenchment often need to calculate more than just severance: leave payouts, notice pay, and final PAYE deductions all form part of the full exit package. PayTools, our SA payroll and salary calculator hub, has dedicated tools for net pay, PAYE, UIF, and leave payout calculations under South African law.

🇬🇧 United Kingdom

Statutory redundancy pay is calculated using an age-weighted formula under the Employment Rights Act 1996: 0.5 week for each full year you were under 22, 1 week for each full year you were 22 to 40, and 1.5 weeks for each full year you were 41 or over, using your age at the start of each year of service. You need 2 years of service to qualify. Weekly pay is capped at £751 (2026/27, reviewed annually), and service is capped at 20 qualifying years. Statutory redundancy pay up to £30,000 is not taxable (gov.uk).

🇺🇸 United States

No federal statute requires severance pay. The amount, if any, depends entirely on your employment contract, company policy, or collective bargaining agreement. The WARN Act (Worker Adjustment and Retraining Notification Act) requires 60 days' advance written notice (or 60 days' pay in lieu) when an employer with 100 or more employees, not counting part-time workers, carries out a qualifying mass layoff. All severance is fully taxable as ordinary income.

🇨🇦 Canada

In Ontario, the Employment Standards Act (ESA) gives two separate entitlements, which the calculator adds together. Termination pay replaces notice and runs from 1 week (under a year) to 8 weeks (8 years or more). Severance pay is 1 week per year of service up to 26 weeks, for employees with 5 or more years at an employer with a payroll of $2.5 million or more, or one that cut 50 or more jobs in six months. British Columbia, Alberta and Manitoba set their own termination pay scales, shown in the table below, and the calculator uses them when you pick the province. Quebec, the other provinces and federal employers follow their own rules and are not included. Common law can require significantly more, based on age, length of service, seniority, and prospects of re-employment, though Ontario courts generally treat about 24 months of notice as the ceiling absent exceptional circumstances (Dawe v. Equitable Life, 2019 ONCA 512).

🇦🇺 Australia

The Fair Work Act 2009 sets a redundancy pay scale from 4 weeks (1 year of service) up to 16 weeks (9 years); at 10 or more years of service, the scale falls to 12 weeks. The scale applies to employees of employers with 15 or more employees, and you need at least a year of service. For 2026-27 the tax-free part of a genuine redundancy payment is A$13,598 plus A$6,801 for each completed year of service. The excess is withheld at 32% under preservation age or 17% from preservation age, up to the A$270,000 employment termination payment (ETP) cap, and at 47% above it.

Weeks of pay by country, with worked examples

Severance pay is your weekly pay multiplied by the number of weeks the law gives you for each year you worked. Weekly pay is your annual salary divided by 52. The weeks per year are what change from country to country, and in the US there is no legal figure at all.

Worked examples

The UK example counts 4 years at 1.5 weeks and 6 years at 1 week, because the employee was 41 or over at the start of the last four years. The US example uses the 22% federal withholding rate plus 7.65% for Social Security and Medicare.

Ontario termination pay vs severance pay: how the two add up

Ontario splits what most people call severance into two payments, and this calculator works out both and adds them. Termination pay is money in place of the notice your employer must give. Severance pay is a separate payment for the loss of the job itself. If you qualify for both, you get both.

Severance pay needs 5 or more years with the employer and either a global payroll of $2.5 million or more, or 50 or more employees let go in six months because of a permanent closure. The amount is your regular weekly wages times your service in years, with each completed month counted as a twelfth of a year, capped at 26 weeks. The weeks of notice your employer gives, worked or paid, count toward your service. Severance is due 7 days after your job ends or on the next regular payday, whichever is later.

All of this is the legal floor. Common-law notice can be far higher, as the Canada section above explains.

Termination pay in British Columbia, Alberta and Manitoba

Under their employment standards laws (British Columbia's Employment Standards Act, section 63, and the Alberta and Manitoba employment standards pages, all read 7 November 2026), these three provinces pay termination pay on a scale of years of service, in place of notice. Pick Canada and then your province, and the calculator applies the scale below to your weekly pay (annual salary divided by 52). Ontario is in the table for comparison. Manitoba starts earliest, at 30 days of service. Alberta starts after 90 days, and British Columbia and Ontario after 3 months.

On those scales Alberta builds up more slowly: 8 years pays 6 weeks there, against 8 weeks in British Columbia and Ontario, and Alberta only reaches 8 weeks at 10 years. Quebec has its own scale under its Act respecting labour standards, which the calculator does not include yet. Common-law notice can be far higher in every province, so these are the legal minimums.

South Africa: the BCEA formula, the tax table and retrenchment packages

Under section 41 of the Basic Conditions of Employment Act, you get at least one week's remuneration for each completed year of continuous service when your employer dismisses you for operational reasons. A part-year does not count, so 8 years and 11 months pays for 8 weeks. On a salary of R450,000 and 10 years of service, one week is R8,654 and the severance is R86,538.

Retrenchment packages and mutual separation or voluntary severance packages usually start from that figure and add to it. The extra is negotiated, not set by a formula, and it often includes notice pay, accrued leave and sometimes a bonus for agreeing to leave. Treat the BCEA amount as the lowest number you should see in an offer.

Severance benefits are taxed on the same SARS table as retirement fund lump sums, and the table is the same for 2024/25, 2025/26 and 2026/27. The first R550,000 is taxed at 0%. After that:

The table counts every lump sum you have taken in your lifetime, so an earlier retirement fund payout uses up part of the R550,000. The calculator assumes there was none. If you want the number in a spreadsheet, you can build a severance pay calculator in Excel with one formula for the severance part: =annual_salary/52*INT(years).

What you take home after taxes, country by country

Severance is taxed differently in every country the calculator covers. The tax estimate is there so you can compare an offer with what reaches your account.

• United States: severance is wages. Your employer withholds 22% federal income tax (37% on the part above $1 million), plus 7.65% for Social Security and Medicare. Withholding is not your final tax bill, and state tax comes on top.
• United Kingdom: the first £30,000 of all payments connected with the end of the job is not taxed. Income tax at your normal rate applies to the excess. Pay in lieu of notice, holiday pay and bonuses are taxed as earnings and do not use up the £30,000.
• Ontario: the Canada Revenue Agency withholds on a retiring allowance at 10% up to $5,000, 20% from $5,001 to $15,000 and 30% above $15,000, outside Quebec, applied to the whole payment. Pay in lieu of notice is normally withheld like wages, so ask your payroll team. The final tax is settled on your return.
• South Africa: the SARS table above.
• Australia: a genuine redundancy payment has a tax-free part, made up of a base amount plus an amount for each completed year of service, set by the ATO each year. The calculator takes it as A$13,598 plus A$6,801 per completed year (2026-27) and applies the ATO withholding rate to the rest: 32% under preservation age, 17% from preservation age, 47% above the A$270,000 ETP cap. The calculator assumes the payment is a genuine redundancy and that you have no other termination payments.

How much redundancy pay am I entitled to in the UK or Australia?

In the UK, statutory redundancy pay is up to 30 weeks of pay, capped at £751 a week in England, Scotland and Wales. The calculator counts the weeks for you. For Northern Ireland, notice pay and the rules for employers, use the dedicated UK redundancy pay calculator.

In Australia, the Fair Work scale is a flat number of weeks by years of service: 4, 6, 7, 8, 10, 11, 13, 14 and 16 weeks for years 1 to 9, then 12 weeks from year 10.

Severance pay: a complete guide to your entitlements

When employment ends involuntarily (through redundancy, retrenchment, or a mass layoff), severance pay serves as financial recognition that an employee who has invested time and effort in an organization deserves compensation beyond a final payslip. While the term "severance pay" is used globally, how it is calculated, taxed, and whether it is even legally required varies enormously between countries.

What Is Severance Pay?

Severance pay is a lump sum payment made by an employer to an employee whose job is terminated under qualifying circumstances. In countries like South Africa, the United Kingdom, Canada, and Australia, statutory minimum entitlements are written into employment law, meaning employers are legally required to pay a minimum amount regardless of what the contract says. In the United States, no federal law mandates severance pay at all; it is governed entirely by employment contracts, company policy, or collective bargaining agreements.

The key distinction that determines eligibility: is the job ending because of the employer's operational requirements (redundancy, retrenchment, restructuring) or because of the employee's performance or conduct? Statutory severance entitlements apply only to the former. An employee dismissed for misconduct typically receives no redundancy pay, though they may still be entitled to notice pay and accrued leave.

Severance Pay vs. Notice Pay vs. Leave Payout

A common source of confusion is conflating three distinct entitlements that often arise together at the end of employment:

Severance pay compensates the employee for the permanent loss of the job itself: the fact that a position that existed has been eliminated. It is often subject to favorable tax treatment (SA's R550,000 exemption, the UK's £30,000 tax-free threshold).

Notice pay compensates the employee for the notice period required before termination takes effect, typically one to three months depending on seniority and jurisdiction. It is taxed as normal income in all jurisdictions and is not the same as severance.

Leave payout covers accrued but untaken annual leave, which most jurisdictions require employers to pay out on termination at the employee's current rate of pay. In South Africa this is calculated at 1/12th of annual leave entitlement per month worked. Leave payout is taxed as ordinary income.

Your total exit package at retrenchment typically includes all three components. The calculator above estimates the severance portion only, and the paycheck calculator shows what your normal pay looks like after tax.

Is Severance Pay Mandatory?

It depends entirely on where you work. In South Africa, the BCEA makes severance pay a non-negotiable minimum: an employer who fails to pay it is in breach of employment law and can face action through the CCMA. The same applies in the UK (statutory redundancy pay), Canada (ESA termination pay), and Australia (Fair Work Act redundancy pay).

In the United States, the Fair Labor Standards Act (FLSA) does not require severance pay under any circumstances. The WARN Act imposes a 60-day advance notice obligation for qualifying mass layoffs, and a failure to provide that notice translates into a liability for up to 60 days' back pay and benefits, but this is technically a notice obligation, not a severance entitlement.

Negotiating Above the Statutory Minimum

Statutory minimums are floors, not ceilings. Employees, particularly those in senior or specialist roles, frequently have room to negotiate a settlement above the legal minimum. Several factors can support a stronger negotiating position:

Length of service significantly beyond the statutory cap provides moral weight even where it provides no additional legal entitlement. Specialist skills that are difficult and expensive to replace give the employer an incentive to part on good terms. A strong and documented performance history removes any suggestion that the retrenchment was a pretext for performance management. Proximity to a significant milestone (vesting of long-term incentives, a planned maternity leave) represents a tangible loss that courts have taken into account in common law jurisdictions.

In South Africa specifically, the Labour Relations Act requires a fair consultation process before retrenchment. A procedurally flawed process (failure to consult, inadequate notice, or failure to consider alternatives) can expose the employer to an unfair dismissal claim at the CCMA, which gives affected employees legitimate leverage in exit negotiations.

What a Severance Package Typically Includes

This severance package calculator covers the statutory pay only. The rest of a package is negotiated. Beyond the cash severance payment, a negotiated exit package may include: continuation of medical aid or health insurance coverage for a defined period; outplacement services (career coaching and CV assistance); accelerated vesting of share options or long-term incentives; a reference letter or agreed public statement about the departure; and a mutual non-disparagement clause. In the US, enhanced packages almost always include a waiver of legal claims in exchange for the additional payment, so always have an employment attorney review before signing.

When to Seek Professional Advice

This calculator provides a statutory minimum estimate based on the formula applicable in your jurisdiction. It does not account for contractual enhancements, collective agreements, enhanced company policies, or common-law entitlements that may significantly increase the amount you are owed. If your employer has offered a settlement below the statutory minimum, contested the retrenchment process, or if your package involves complex tax treatment (large amounts, share plan vesting, pension implications), consult a labor lawyer or HR specialist before accepting any offer or signing any agreement.