This can be a great turning point. For some it means retirement and the chance to do the things they have always dreamt about. For others, redundancy can be a launching pad to an exciting new career or business opportunity. However, for some, losing a job can be a time of great uncertainty and stress.
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 does not occur when:
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:
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.
While they won't recommend any particular person, they can give you a list of lawyers in your area who specialise in your needs.
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