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What should you do if you’ve been made redundant?

With the threat of an increasing unemployment rate, an economy that has slowed down and advancements in technology- it is a real possibility that your role could be made redundant which could leave you financially disadvantaged if you don’t know what options you have available to you.

Some positive news is that a SEEK study found that 60% of Australians made redundant found another job within two months. That’s 17% in less than two weeks, 20% within three to four weeks and 23% within one to two months.

A redundancy occurs when the employer no longer has a need for a particular role due to operational reasons and the employer has complied with any obligations imposed from modern awards or enterprise agreement to consult with the employee about the redundancy. This is known as a genuine redundancy.

Know your rights and entitlements

If your role has been made redundant than you will have a notice period. While the Fair Work Ombudsman outlines minimum notice periods, which are set out below.*

Employment duration Notice Period
Employed less than 12 months 1 weeks’ notice
Employed between 1-3 years 2 weeks’ notice
Employed for over 5 years 4 weeks’ notice

Longer minimum notice period may apply depending on the nature of the employment arrangement such as an individual employment agreement, enterprise agreement or modern award, you should check your individual agreement for more information.

Your final redundancy payment should comprise of a tax free component based on years of service and a concessionally taxable component over this amount up to a certain cap.

The tax-free limit is:

Base amount + (service amount × years of service)

For example, for 2019–20 the tax-free limit is equal to $10,638 (base amount), plus $5,320 (service amount) multiplied by the years of service.

Ensure you are paid out any outstanding leave entitlements such as Annual Leave and Long Service Leave.

Know your superannuation entitlements and what you are owed based on your salary which is a minimum of 9.5% on your gross income (2019-2020 FY).

Get your finances in order and have a redundancy plan

You don’t know how long it will take to get a regular income again, so now is the time to make sure are doing everything you can to manage your expenses and get back on track to start a new role.

Redundancy Plan

  • Set yourself a budget by looking at your expenses and seeing what you can cut down
  • Ensure money first goes towards your debt obligations and set aside an amount for the next couple of months as well as an emergency fund to access if the job hunting takes longer than expected.
  • Review your resume and update with any new skills and details relevant for the new role you want to go for
  • If you are thinking of changing industries- Look into new courses or training you can complete
  • Look at every opportunity through your professional and social network and let people know you are actively looking for a new role
  • Look at speaking to recruitment firms that specialise in your industry to get the necessary interview, CV and required skills for the job you are after.
  • Practice your interview skills and how you will talk about the redundancy and your past roles as well as what value you will add to a new employer

Finally, remain positive and see this as an opportunity to change your life for the better and go into each interview with a ‘can do’ attitude as this will be visible to the interviewer.

With a clear plan, knowing your rights and entitlements as well as using the resources you have available, you will be on the right path to securing a new role.

Please contact our office if you are going through a career change or need guidance on your options.

 

*Further details can be found at https://www.fairwork.gov.au/ending-employment/redundancy/redundancy-pay-and-entitlements

The material shown in this article is for general information purposes only. It is not intended to be, nor should it be read as specific personal investment or risk advice.
Before acting on any of the information contained in this article you should obtain special advice from a specialist investment or risk professional, which is appropriate to your specific investment or risk needs, objectives and financial situation.
Whilst all care is taken in the preparation of this material, no warranty is given with respect to the information provided, and accordingly no responsibility for errors or omissions, including responsibility to any person by reason of negligence is accepted by RP Wealth Management.

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Ronald Pratap

Principal Financial Planner at RP Wealth Management | Financial Planning l SMSF I Insurance l Property Advisory. Our purpose is to provide our clients with sound advice and direction to assist with their financial affairs and help them make the best choices in achieving what is important to them.

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