Redundancy

There are strict guidelines that employers must follow when dismissing an employee due to redundancy. These guidelines can vary from state to state and you should seek professional legal and financial advice.

The first thing to understand is what is and what is not a redundancy, according to the Australian Taxation Office (ATO):
A bona fide redundancy can occur when:

• The job of an employee ceases to exist;
• The decision is not due to the ordinary and customary turnover of labour;
• The decision led to the termination of the employee's employment; and
• The termination is not on account of any personal act or default of the employee, or caused by any consideration peculiar to the employee, or for personal or disciplinary reasons.

A bona fide redundancy does not occur when:

• The employee reaches normal retirement age;
• The employee was not dismissed but left voluntarily;
• Another employee of similar age or skills replaced the employee soon after;
• The employee was dismissed for disciplinary reasons; or
• The employee was dismissed for inefficiency.

If there is a dispute over your redundancy, then you should seek advice. Fair Work Australia can provide an overview of your rights, and can also provide information on unlawful termination and unfair dismissal.

Unlawful termination is when the employer has broken the law by dismissing a person for one of the reasons prescribed under legislation. For example, an employer must not terminate your employment on the grounds of sex, race, colour, sexual preference, pregnancy, age, political opinion, physical or mental disability, religion, marital status, family responsibility, national extraction or social origin.

Unfair dismissal is when an employee is dismissed on grounds that were harsh, unjust or unreasonable. Some workplaces and employees are excluded from the unfair dismissal legislation.

If you have been subject to a redundancy, then a portion of your payout may be tax-free. A portion of the remainder of your payout may also qualify for special tax concessions. Each person’s situation will be different and you can check what applies to you through the ATO (go to individuals and search “how tax applies to redundancy payments”).

Any redundancy payments that exceed the tax-free limit are treated as an Eligible Termination Payment (ETP). These payments may attract tax concessions. The tax treatment of redundancy payments are a complex area and difficult to summarise briefly and simply. Tax treatment may be influenced by issues such as:

• The size of the payment
• The number of years you have been in your job
• Your age
• Whether or not you roll-over the payment.

It is also important to note that your final payout is likely to consist of a number of elements, some of which may not be included in your ETP and therefore taxed at your normal rate. You should seek advice from an appropriately qualified accountant or tax adviser.

If you have lost your job because your company has gone bankrupt and if you are still owed some of your entitlements, you may be eligible for compensation from the Federal Government. You can find out more at the Department of Education, Employment and Workplace Relations.

If you need legal advice and do not have a lawyer who specialises in employment disputes, you can contact the Law Society or Institute in your state or territory for help finding one.

• NSW
• Queensland
• Victoria
• ACT
• Northern Territory
• Tasmania
• South Australia
• Western Australia

While they won't recommend any particular person, they can give you a list of lawyers in your area who specialise in your needs.

If you are feeling depressed or stressed, there is no need to go through it alone.

• Beyond Blue
• Family Relationships Online
• Relationships Australia
• Lifeworks
• Mensline
• The Anglican Church support service
• The Catholic Church support service
• Lifeline or call 131 114.

Now could be an ideal time to take stock and consider your options. We can help you move forward with confidence.

An A-Z Review^® - we have specialists that could help you better manage the changes that redundancy can bring. Along with reviewing your situation to see where we can help, our specialists can also ensure you have the right accounts to suit your needs and access any benefits that could be available to you. Request an A-Z Review^® at your nearest ANZ branch.

An ANZ Financial Planner – can help you:

• understand your termination payment and the tax ramifications;
• identify an appropriate way of investing your accumulated superannuation benefits depending on your situation;
• work out strategies for managing your debts effectively through the transition;
• establish new budgets to help you adapt your finances to suit your new asset and income situation;

Our Planners are skilled specialists and are backed by the research and expertise of ANZ. They are salaried employees of ANZ and are there to provide you with appropriate advice tailored for your circumstances. Your first appointment is complimentary and without obligation, to discuss your financial situation, needs and goals and explain how the ANZ Financial Planner can assist. Book an appointment with an ANZ Financial Planner.

ANZ MoneyManager – you may be budgeting and if that’s the case ANZ MoneyManager is a free online budgeting tool that updates and categorises your financial data daily so you can keep track of your spending. Find out more or register for ANZ MoneyManager.

ANZ Financial Planners are representatives of Australia and New Zealand Banking Group Limited, ABN 11 005 357 522, the holder of an Australian Financial Services licence.

® A-Z Review is a registered trademark of Australia and New Zealand Banking Group Limited (ANZ) ABN 11 005 357 522.