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What is Redundancy?
What is Redundancy?
Being made redundant from your job can be an incredibly stressful experience – especially if it comes out of the blue.
Redundancy is a form of dismissal that occurs when an employer no longer requires an employee’s job to be performed.
Redundancy can cause a blow to the confidence, and raise many questions: What redundancy payment will I receive? How will I find a new job? Was my redundancy genuine or an unfair dismissal?Redundancy can put pressure on your financial wellbeing, so it is important to assess your financial situation quickly to allow you to manage it properly moving forward.
Our guide will help get you back on track and looking forward to a re-energised focus on your financial future.
How does redundancy occur?
An employer generally makes a role redundant when it is no longer required for the business.
This may occur due to several reasons, such as the business restructuring its operations to save money or as a result of a merger; the introduction of new technology that replaces the work previously done by an employee; the business relocating interstate or overseas; a slowing or cessation of production; or the business becoming insolvent or bankrupt.
Redundancy often comes swiftly and with little notice – adding to the stress of the situation.
If you’re feeling overwhelmed by a redundancy, you can seek independent professional advice to help guide you in the right direction.
What are the different ways of being made redundant?
There are two types of redundancy – genuine redundancy and non-genuine redundancy.
Knowing the difference will help you assess your financial situation and ensure you receive the correct redundancy payment.
Genuine redundancy
Genuine redundancy occurs when an employer no longer requires an employee’s job to be performed.
To qualify as genuine redundancy, the employer must demonstrate that the employee’s job is no longer needed and that there are no alternative roles available within the business.
Genuine redundancy is a fair reason for dismissal, and employees who are made redundant are entitled to redundancy pay.
Fast fact: If you are made redundant you should receive severance pay in addition to notice, as well as any accrued leave you have. However, if at the time of being made redundant your employer employed fewer than 15 workers in permanent or ongoing regular work, then you are not entitled to severance pay. (Source: Australian Workers Union).
Non-genuine redundancy
Non-genuine redundancy is also known as ‘unfair dismissal,’ and occurs when an employer terminates an employee’s job without a valid reason. For instance, an employer may make an employee redundant based on race, religion, age, sex, or to avoid paying bonuses.
Non-genuine redundancy can also occur if an employer fails to follow the proper redundancy procedures. In such instances, the employee may be entitled to legal remedies or compensation.
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Redundancy can be one of the most stressful events in a person’s working life and can bring up a raft of questions and concerns.
It is essential for both employers and employees to understand the difference between genuine and non-genuine redundancy – and to ensure the redundancy process is both fair and transparent.
No matter which way you have been made redundant, the team at MBA Financial Strategist can provide a tailored service to help guide you through the financial details of redundancy, so you can look forward with optimism to a new chapter in your career path.
You can read more about redundancy here, or get in touch with our team. If you would like to make an appointment with a financial planner simply phone the office on tel |PHONE| to make a time with one of the team or alternatively book an appointment using our online booking link – simply select a financial adviser and choose an appropriate time and day for your appointment.
Sources for blog:
MBA Financial Strategists Pty Ltd ABN 13 008 285 756 is an Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited ABN 89 051 208 327, Australian Financial Services Licensee and Australian Credit Licensee 232706. 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.