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An employee guide to understanding redundancy

Redundancy is a big fear for many employees, as it means that your services are simply no longer needed and you have been relieved of your role. Red

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Redundancy is a big fear for many employees, as it means that your services are simply no longer needed and you have been relieved of your role. Redundancy occurs when an employee, for any variety of reasons, is no longer needed. In this case, the employer is unable to redeploy the employee to another role or offer them an alternative position within the company. When this happens, the employee is let go and made redundant.

Employee made redundant

However, there are cases where you can appeal against dismissal. For example, if you find out that the post that was announced to be redundant was later offered to someone else, you might have a case.

With the help of experienced dismissal lawyers, you can challenge your dismissal. While this is certainly possible, most redundancies are genuine and occur for a number of different reasons. Machinery may have replaced management work, cost cuts are necessary because the company faces bankruptcy, the company closes or relocates, a merger takes place, or roles redistributed within the organization are all real reasons for actual dismissal.

Understanding redundancy is important so that you can take the right action if you find yourself in this unfortunate situation. Let’s take a closer look at what redundancy is so you can make the right decisions if you or a colleague are ever in this difficult set of circumstances.

Voluntary redundancy

Voluntary dismissal is when an employer appeals to employees who would like to report to be made redundant. Typically, the employees who volunteer will receive financial compensation for leaving their jobs early, known as an “excess package.”

Employees who are close to retirement, have in any way considered a change of career or who find the allure of the compensation too good to pass up, are all likely candidates for voluntary dismissal. This type of dismissal often saves the business from making difficult decisions, which keeps morals high after the dismissals have taken place.

Compensation for redundancy

Despite what you may think, employers are not always obligated to compensate their employees in the event of dismissal. While many people associate healthy discharge packages with people being made redundant near the end of their careers, this is the Cinderella story and is not always the case. For example, if you are an employee in a business of less than fifteen employees, compensation is not required as the business is considered too small.

If the employee is an apprentice, they are also not entitled to dismissal. What’s more, those employees with a temporary or fixed-term employment contract are also not entitled to compensation in the event of dismissal. Make sure you take the time to look at what you are entitled to so you know where you stand.

Overview of severance payments

If you are made redundant and a redundancy payment is issued to you, you can expect your first payment once all the redundancy consultations have been completed. The employee will be made aware of the terms of the dismissal and will be asked to be aware that they are making an informed decision, and then the agreement can be signed.

Dismissal payments are typically tax-free, as long as the dismissal is genuine and the payments do not exceed the tax-free limits set by the ATO. However, it is important to keep in mind that the tax limits are adjusted each year so that last year’s limit can be higher or lower than the limit set for this year.

Dismissal packages will generally include payments as a replacement for the required notice period, as well as a severance package that will include unused sick leave, compensation for service time at the company and other similar issues. A significant one-time payment will also be included as compensation for the dismissal that takes place.

Who does not receive severance pay?

Unfortunately, not every employee who is made redundant will receive severance pay. According to the law, there are some employees who are not entitled to dismissal compensation due to the nature of the employee’s arrangement. Some circumstances where an employee is not entitled to severance pay include employees with less than twelve months’ service, employees who have been terminated due to serious misconduct and employees who have been employed for a fixed period such as for a particular season or project .

Employees of casual workers, apprentices and those in small businesses who employ a team of fifteen people or less also do not receive severance pay. While being informed about who does receive severance pay and what they are entitled to, it is just as important to understand that not everyone will be taken care of.

Research redundancy to find out where you stand

Dismissal is every employee’s worst nightmare. The tips outlined above will help you gain a better understanding of what redundancy is and how it can affect your life. However, it is also wise to do a little research that is specific to your unique circumstances.

With the right information, you can ensure that you are prepared for the worst case scenario and that you will have a plan in place to move forward.

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