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Redundancy survival guide – get what you're owed and prepare for reinvention - The Age

By Alan J. McDonald


Redundancies are becoming more common within evolving workplaces. McDonald Murholme Senior Associate Trent Hancock discusses workplace rights for employees who are made redundant with The Age’s ‘Money Magazine’.

See below article for further details.

Redundancy survival guide – get what you’re owed and prepare for reinvention

When Adrian Boniciolli was retrenched after more than a decade at photocopying powerhouse Xerox, his final payout was nearly six months’ salary.

With the luxury of time before lack of money would force him to find a job, he decided to tackle the task of renovating his home in the inner-Sydney suburb of Marrickville.

“We got a very fair deal and I wasn’t too concerned because I knew I could get another job as a photocopier technician easily if I wanted to, given my experience at Xerox,” Adrian says.

Adrian, 40, worked as a team leader managing 10 technicians, responsible for servicing photocopiers across a large part of Sydney. His job was axed in a major corporate restructure that had been “a long time coming”.

Adrian’s story is a common one, with disruption in the photocopying sector mirrored in the wider economy. Businesses are restructuring at breakneck speed as the twin forces of technology and globalisation upturn entire industries, from manufacturing to retail.

He was offered the chance to apply for a new role but it came with a greatly increased workload; meanwhile, the company was offering its unionised workforce generous severance deals. In the end, all the team leaders including Adrian took redundancy in November 2014.

While the official unemployment rate now stands at 5.8 per cent, the real rate is much higher. About 2.4 million Australians, or 18.8 per cent of the workforce, are now either unemployed or underemployed, according to a Roy Morgan poll conducted in March.

This situation is only going to get worse. A report from the Committee for Economic Development of Australia last year found that huge changes in the Australian workplace are likely to occur over the next 10 to 15 years and that technology could replace almost 40 per cent of Australian jobs, including many high-skilled roles.

So what happens when you’ve worked for the same organisation for years, sometimes decades, and you’re suddenly forced to find another way to sustain yourself and your family, often as you near the twilight of your working life?

Plan of action

Sandy Hutchison, founder of career transition platform Career Money Life, says it’s important not to rush into the job hunt.

“Like any emotional upheaval, there are grief stages that people go through, and there is no point fronting recruiters and would-be employers while you are working through the grief process,” she says.

Once you’re over the initial shock, you need a financial plan of action. The size of your payout will play a large part in your decision-making, but for most this will mean calculating what your minimum weekly living expenses and debt repayments are. This will give you a rough guide as to how long your payout will last before you need another pay cheque.

Hutchison says it’s important to get advice from a financial adviser, rather than treating it as a windfall.

“It may feel like you’ve won the lottery so you need to understand that it may have to last for quite a while,” she says. “You also need to understand the implications of changes to your super and any insurance that may have been contained in your super.”

Contact Centrelink to get a clear understanding about how your termination pay affects your eligibility for payments and concessions, and bear in mind that your payout will usually delay the start of payments.

Once you’re ready to start actively looking for work again, you should look at your current skill set and where you need to upskill. If you can afford it, you may want to spend some of your payout on training and courses, especially if you’ve just left an industry that is shrinking and your future job prospects are thin. This will require some research, especially if the industry you’d like to move into requires you to move locations due to limited opportunities in your home area.

Government agencies can help. For example, the Career Development Association of Australia can advise you about courses you can take to gain the sorts of skills you need in particular sectors, while jobactive offers programs and services to help you look for work. A jobactive provider will assess your circumstances in detail and work with you to help you re-enter the workforce as soon as possible. They can also offer information about job opportunities in your area before you can access similar services from Centrelink.

Apart from the plethora of employment websites, social media sites such as LinkedIn and Facebook can be good ways to network with people in your industry and former colleagues.

“You need to build an authentic relationship with these people and think about how you can add value to their organisation. Don’t just ask them for a job,” Hutchison says.

Know your rights

Redundancies can occur for a number of reasons: a slowdown in your employer’s sales or production, a relocation interstate or overseas, or a restructuring following a merger or takeover.

Under Australian law a dismissal is not deemed a genuine redundancy if your employer still needs someone to do the work you were doing, has not consulted with you about the redundancy under an award or registered agreement, or could have reasonably given you another job within the organisation.

Trent Hancock, a senior associate at Melbourne-based employment law firm McDonald Murholme, says workers shouldn’t just accept their bosses’ word for it if they are not happy with the explanation.

“Often giving out a redundancy is just a nice way of sacking someone and an employer needs to prove that the role is not merely going to be filled by someone else,” Hancock says.

All awards and registered agreements have a consultation process for redundancies. This sets out the things the employer needs to do and this has to be done as soon as possible after the decision has been made.

“Workers can’t merely be made redundant for things such as pregnancy, which would be regarded as discrimination,” Hancock says. “Employers who go down that path leave themselves open to unfair dismissal procedures.”

Once you’ve accepted the redundancy, it’s vital that you make sure you will receive all the payments you are entitled to. Employers have to offer a notice period that will vary depending on the terms of your employment contract. Often they’ll offer to pay out that period in lieu of the minimum period. They must make any such payment at the full rate of pay the employee would have expected to receive, and include standard overtime and allowances.

Under the terms of the Fair Work Act, employers must pay severance pay (based on ordinary hours) to all employees as follows: four weeks for one to two years in a job; eight weeks for four to five years and 16 weeks for nine to 10 years. Most employers will also pay out accrued annual leave and benefits including pro-rata long service leave. Rates will differ for permanent part-time employees.

Obtain as much advice about your payment and arrangements as possible, both before and after your redundancy happens. You should also decide what you think a reasonable amount is.

Belonging to a union helps in these situations as union representatives will fight to obtain the optimal payout amount for you. Losing your job might also mean losing salary-package entitlements such as paid mobile phones, income protection insurance, company cars and membership of professional bodies. If that’s the case for you, work out their value and negotiate for compensation for their loss.

Hancock says the redundancy entitlement amount is often determined by the fine print of an employment contract, which may include information such as whether you’re covered under an enterprise agreement or a contractual entitlement (a clause built into the employment contract or an entitlement that appears in a redundancy policy).

You may also want to consult an employment solicitor if you’re unsure about exactly what you’re entitled to, especially if you’re not a member of a union.

If your employer becomes insolvent or bankrupt, you may be entitled to a safety net of minimum payments from the General Employee Entitlements and Redundancy Scheme which is available through the federal government’s Fair Entitlements Guarantee.

Redundancies also attract favourable tax treatment. The tax-free portion is usually the base amount (currently $9514) plus the service amount ($4758) multiplied by the number of years of service. Any amounts over this portion are taxed at a maximum of 32 per cent if you are below preservation age (which ranges from 55 to 60), or 17 per cent if you have reached preservation age. Unused annual leave and long service leave is also taxed at a concession.

A new beginning

Some redundancies work out, while others don’t. For many, it can be hard to retrain or move in a new career direction, especially for those in their 50s when age discrimination sets in.

For others, a termination notice accompanied by a lump sum of cash can provide the impetus they need to start afresh and pursue something they might have been meaning to do for a long time but had been constrained by their work and financial situation.

Adrian Boniciolli was one of the lucky ones.

“I’d always had a great working relationship with Xerox but I was at that stage where I was wondering if this was really what I wanted to do with the 20 or 30 remaining years of my working life,” Adrian recalls. “Besides, photocopiers are on the way out.”

At first Adrian was enjoying hanging out at time at home with his two young kids. He didn’t start looking for work for a couple of months, then he missed out on a few roles. After a while nothing was catching his eye and, facing the prospect of getting more qualifications to go for higher-level roles, he realised he wanted a change instead.

In the end it was his renovation project that inspired his new career. It started out small, with a few jobs on Airtasker – an online platform that lets people post small, local jobs such as handyman work, furniture assembly or errands, while others bid to complete the work, and has a two-sided rating system just like eBay or Uber.

It went so well that Adrian started a handyman business, called Garage Rescue Australia.

“I’ve always been good at fixing things and I loved the stuff I was doing around the house so I started sourcing odd jobs from Airtasker to earn some cash.

“After a short time, I was getting more and more work and decided to see what would happen if I treated it like a business. Initially it felt a bit like gambling in that you don’t really know what you’re getting yourself into, but over time the amount of work became steady.”

Now Adrian has a nearly full-time workload that he enjoys far more than his old job, the freedom of being his own boss, and his carpenter brother is joining him in the business.

“I can’t complain about anything that’s happened so far,” he says.

Reference: Redundancy survival guide – get what you’re owed and prepare for reinvention, The Age, 20th July 2016