Redundancy payments retrenchment entitlements termination pay gas 89

While there have been government guidelines on appropriate levels of pay for people being retrenched and many employers have paid their employees fairly, pages 43-47 of the new National Employment Standard set mandatory minimum redundancy payments for employees in Australian workplaces, coming into effect in January 2010.

Until the new arrangements come into effect, you’ll need to refer to the award that applies at your workplace or the employment agreement under which you are employed to work out exactly what you’re entitled to receive. Ask your manager or human resources department for more details. They will be able to provide you with a copy of your workplace agreement if you cannot locate your own copy.

The Act prescribes that employers must provide a written notice of impending retrenchment and a pro-rata minimum period of notice based on how long the employee has been working for the employer. One week of notice must be provided to employees who are in their first year of employment with the company, rising to four weeks of notice for those who’ve been with their employer for more than five years. Employees over 45 years with at least two years of continuous service receive an extra week of notice.

Most employers will also provide payment for accrued annual leave and benefits including pro-rata long service leave, and a redundancy payment based on their years of service. Although this may vary between employers, minimum payments (based on ordinary hours) must be paid to all employees as follows:

It’s possible losing your job might mean you also lose other entitlements that you can’t readily walk away from without compensation. Mobile phones, income protection insurance, company cars and membership of professional bodies are just some salary packaged entitlements you may now have to fund independently. Work out their value and negotiate for compensation for their loss.

If you require assistance understanding any employment documents you’re asked to sign, contact Job Watch, an employment rights legal centre that provides assistance to Victorian workers about their rights at work. You should do this prior to signing your employment release and you may also wish to seek advice or speak to your union or superannuation fund.

If you’re retrenched and have a termination payment, you probably won’t know how long the money will have to last, or how to put it to the best use. A termination payment may seem like a lot of money in a lump sum. It will probably include your annual leave and pro-rata long service leave entitlements and a redundancy payment that is based on the number of years you’ve been in your job.

Contact Centrelink to get a clear understanding about how your termination pay affects your eligibility for payments and concessions. Remember redundancy payouts usually delay the start of Centrelink payments. You’ll have to keep aside sufficient money to cover your household and personal expenses and your debts until you have satisfied the Centrelink waiting periods.

If you temporarily deposit your payment in a cash-management or online savings account, it can safely earn 4-5% interest while you take some breathing space to consider your options about how to best use your money. If you have a mortgage off-set account, you could deposit the money there and receive the benefit of reduced interest, but still have access to the funds.

For most people, their mortgage will be their biggest debt and their highest priority. However, this does not mean you should pay all additional money you receive off this debt and not pay attention to smaller loans and credit for everyday expenses.

If you leave work with a redundancy package equivalent to 12 weeks pay, you won’t be eligible for Centrelink payments for at least 12 weeks. In ideal circumstances, you will be up to date with all your payments at this time – that is, keeping up with your bills and incurring essential and manageable debts only.