Golden Handshake Australia 2025: Key Facts & Financial Impacts

Golden handshakes—those headline-grabbing severance packages—are making waves again in Australia. With the 2025 job market in flux and several high-profile executive exits, it’s crucial for both employees and employers to understand the financial and legal landscape surrounding these payouts. Let’s unpack what a golden handshake really means today, how the rules have changed, and why it matters more than ever in the current economic climate.

What Is a Golden Handshake? The 2025 Perspective

In simple terms, a golden handshake is a substantial financial package offered to an employee—usually an executive—upon leaving a company. Traditionally, these packages have been reserved for senior leaders, but economic volatility in 2025 has seen them extend to middle management as well, especially during mergers, restructures, and strategic pivots.

Golden handshakes can include:

• Large lump-sum severance payments

• Accelerated share vesting or stock options

• Bonus payouts or deferred compensation

• Other perks such as continued health insurance or company car

Recent cases, such as the high-profile departures at several ASX-listed firms, highlight just how significant these packages can be—sometimes exceeding millions in cash and equity.

How Are Golden Handshakes Taxed in 2025?

One of the most critical considerations for anyone receiving a golden handshake is tax treatment. As of July 2024, the Australian Tax Office (ATO) has updated its rules on employment termination payments (ETPs), directly impacting golden handshakes in 2025:

• Tax-free thresholds: The ETP tax-free cap has been indexed to $12,500 for the 2024–25 financial year. Anything above this cap is taxed at marginal rates.

• Genuine redundancy: If the payment is part of a genuine redundancy, additional tax concessions may apply, but only up to the cap.

• Share schemes: Accelerated vesting of shares or options is now subject to the revised employee share scheme rules, often triggering capital gains tax (CGT) events.

For example, if an executive receives a $200,000 golden handshake (of which $50,000 is deemed ETP and the rest is share vesting), only a portion will be taxed at concessional rates, with the remainder potentially taxed at up to 47% (including Medicare levy).

Golden Handshakes and Corporate Reputation: A New Balancing Act

The optics of golden handshakes have become increasingly important in 2025. With cost-of-living pressures and workforce reductions in many sectors, investors and the public are scrutinising large payouts more closely. Several recent ASX company AGMs have seen shareholder votes against excessive golden handshakes, leading to revisions of executive contracts and more transparent disclosure requirements.

Boards are now:

• Linking severance packages to performance or tenure

• Including “clawback” provisions for misconduct or poor results

• Disclosing potential payouts in annual reports to avoid surprises

This shift is not just about fairness—it’s about maintaining trust with employees, investors, and regulators.

Should You Negotiate a Golden Handshake?

Whether you’re a senior executive or a middle manager, negotiating a golden handshake is about understanding your leverage and the current market conditions. In 2025, industries like tech, finance, and resources are seeing the biggest payouts, but even smaller firms are crafting bespoke exit deals to attract and retain top talent.

• Review your employment contract for existing severance terms

• Factor in the latest tax thresholds and ATO rules

• Consider seeking expert legal or financial advice to maximise your after-tax outcome

Ultimately, a well-structured golden handshake can provide a financial buffer during career transitions—just be sure you know the real net value after tax and benefits.