Redundancy Pay Mistakes Australians Make and How to Avoid Them

Updated 25 June 2026 · Tax and pay

A Redundancy Pay Calculator gives a fast answer, but the answer is only as good as what goes in. These are the mistakes we see most often with redundancy pay calculations in Australia, and how to avoid them.

1. Treating a deduction as a refund

A $1,000 deduction reduces taxable income by $1,000. The cash benefit is only your marginal rate on that amount.

2. Confusing marginal and average tax rates

Moving into a higher bracket only raises the tax on the dollars above that threshold. Your average rate is always lower than your marginal rate.

3. Forgetting the Medicare levy

Most take-home pay estimates that leave out the 2% levy overstate pay by hundreds or thousands of dollars.

4. Using last year’s tax rates

Brackets and offsets change. The Stage 3 changes from 1 July 2024 and further cuts from 1 July 2026 mean older figures can be well off.

5. Overlooking the detail that matters most here

Small businesses with fewer than 15 employees are generally exempt from NES redundancy pay, but your contract or award may give more.

How the redundancy pay (gross) changes with years of continuous service

A common mistake is getting one input slightly wrong. Here is what happens to the redundancy pay (gross) when “Years of continuous service” is off by up to 20% in either direction, with everything else held steady.

Years of continuous service	Redundancy pay (gross)
5	$18,000.00
6	$19,800.00
7	$23,400.00

At 5 the result is $18,000.00; at 7 it is $23,400.00. If a small change in this input moves the answer a lot, it is worth double-checking that figure before you rely on the result.

A quick sense check

Redundancy pay = base weekly pay × weeks from the NES scale (4 weeks after 1 year, rising to 16 weeks at 9 years, then 12 weeks from 10 years). With typical inputs the calculator returns redundancy pay (gross) of $19,800.00. If your own result looks wildly different, check that each figure is in the right unit and period (weekly, monthly or yearly) before drawing conclusions.