By Hayley Hart, Associate Financial Planner
Redundancy can be a difficult time for employees and their families. There is often uncertainty about what lies ahead, and this can lead to high levels of stress and sleepless nights. While redundancy cannot be prevented, there are steps you can take to minimise the emotional and financial impact on you and your family. Here are some common questions people have about redundancy.
1. What is a redundancy?
Redundancy happens when an employer either no longer requires an employee’s job to be done by anyone, or when an employer becomes insolvent or bankrupt. This can happen for a number of reasons including when the employer restructures, relocates either interstate or overseas, when sales volumes decrease or when new technology is introduced that reduces the need for human capital.
2. What is the difference between a dismissal and a genuine redundancy?
A redundancy is considered a genuine redundancy when the employer no longer needs the job to be done by anyone and the employer followed the correct redundancy process. A dismissal is not considered a genuine redundancy if the employer still needs the employee’s job to be done by someone, has not followed the correct redundancy process requirements or could have given the employee another suitable job within the organisation.
3. Will my employer provide with me any compensation if I am made redundant?
Your employer may provide you with a redundancy package, and this will vary from employer to employer based on a number of factors. This package may include a redundancy payment, an incentive payment, a payment in lieu of notice and unused annual or long service leave. Contact your HR department or employer for more information about what you would be entitled to if you were made redundant.
4. Is there anything I can do if I think I might be made redundant in the near future?
Planning for a potential redundancy isn’t a bad idea. The first thing you might like to do is inquire about the entitlements your employer would provide you with if you were made redundant. Once you have this information, you will have a better idea of what your financial situation will look like post-redundancy. You may also like to update your resume, and keep an eye on the job market to see whether there are many vacancies that would be suitable for you. The number of suitable vacancies is often an indicator of how easy it will be for you to find another position.
5. What should I do if I am made redundant?
There are a number of steps you should take if you are made redundant:
- Ask your employer about your redundancy entitlements;
- If you belong to a corporate superannuation plan, check what will happen to your insurance cover held within the plan;
- If you intend to return to the workforce, begin looking for a new job;
- Work out your expenses over the coming months to determine whether you have sufficient funds to cover your living expenses.
You may also consider seeking the advice of a financial planner. At Blueprint Wealth we offer financial advice that is right for you, no matter what stage of life you are at. Contact us to set up a plan that is right for you.
Hayley Hart is an Authorised Representative of AMP Financial Planning Pty Ltd, ABN 89 051 208 327, AFS Licence No. 232706. Blueprint Planning Pty Ltd (ABN 78 097 264 554), trading as Blueprint Wealth, is an Authorised Representative and Credit Representative of AMP Financial Planning Pty Ltd, Australian Financial Services Licensee, and Australian Credit Licensee.
This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. If you decide to purchase or vary a financial product, your financial adviser, AMP Financial Planning and other companies within the AMP Group may receive fees and other benefits. The fees will be a dollar amount and/ or a percentage of either the premium you pay or the value of your investment. Please contact Blueprint Wealth on (08) 9423 0300 if you would like more information.