Redundancy Advice For Employees

Redundancy can be a difficult experience for employees both emotionally and financially, but it doesn't have to ruin your financial plans for the future. During this time a financial adviser can help to take control of your finances and ensure you stay on track with your long-term goals.

They can help you:

• Plan what to do with any termination payments including leave payments and redundancy payments
• Choose the right fund for your super
• Manage debt
• Set a new budget and discipline your spending
• Ensure you have the right insurance cover
• Access Centrelink payments, if necessary
• Establish a new plan for your financial future

A little extra planning now could make a huge impact on your financial position in the future. So talk to a financial adviser today.

Redundancy Payments and Superannuation

The amounts you may be entitled to in a redundancy vary widely between employers, or may be determined by your Award or workplace agreement.

Redundancy packages are generally made up of different components such as payments for unused annual and long service leave and redundancy payments which can consist of amounts paid in lieu of notice, amounts calculated based on your period of service and also gratuities or golden “hand shakes.” These payments will usually be set out for you by your employer on a 'statement of termination payments’, which usually shows the gross amounts and tax that will be deducted. Some amounts paid to you in redundancy will be tax free and the statement from your employer should show these as well.

Termination of employment may also be a time which leads to vesting of entitlements under Employee Share Schemes, and a consequent taxing point. You should see an adviser in these circumstances.

Often you will have insurance provided by your employer or through the employer super fund. These arrangements will usually come to an end when you leave your employer. You will often have a 'continuation option’ which allows you to continue a certain level of your insurance after leaving your employer without having to undertake the medical examinations which are usually part of obtaining life insurance. A financial adviser can discuss this important opportunity with you to make sure that you don’t accidentally let an important benefit expire.

Leaving your employer will also mean that you have to change your superannuation arrangements, or arrange to ‘rollover’ your super benefit to another super fund. You may also be able to cash out part of your benefit, or even think about retiring. Cashing out your super benefit can have tax consequences. Cashing out your benefit or even rolling over to another fund should only be done after seeing a financial adviser.

If you are considering taking a redundancy package, a financial adviser help you make an informed choice about your package. They can help you:

• understand the different parts of your package
• identify opportunities to better manage tax
• make a good choice for your superannuation benefit
• re-pay or manage debt repayments
• plan efficient use of your package pending re-employment or retirement plans
• help stop you from over-spending and set up a budget

With a bit of careful planning, redundancy doesn't have to spoil your long-term plans, and in some cases can even put you in a better financial position. So talk to a financial adviser today.