From redundant to abundant: how to make the most of being let go

Estimated reading time
 8 min

In this article

• Support available to help guide you through your redundancy
• Understand what redundancy is
• Organise your finances and stay on top of debt

When it’s your choice, changing jobs can be incredibly exciting. But when the decision is taken out of your hands, you’re more likely to be feeling anxious. 

In addition to financial security, a job can help you feel anchored in all spheres of your life. So, it’s natural to feel lost when you’re in between roles. But losing your job by reason of redundancy doesn’t have to be an entirely negative experience. Managed properly, it can be the catalyst for healthy change, or a momentary disruption before continuing where you left off.

We’ve pulled together a few tips and insights that might help you understand how to make the most of an unexpected situation. We’ll explain your rights, how your payout might work, and how you can access further help as you venture towards your next goal. Before we get to that, let’s start with the basics.

What is redundancy?

Technically speaking, a redundancy is when your employer no longer needs your job to be done. So, your role no longer exists. This could be because new technology was invented, the market changed, and what you produce is no longer needed or your employer outsourced your duties to another organisation.  It could also be because your employer has split up your duties and allocated them to other roles as part of a restructure.

Whatever the reason, the important thing to remember is that it’s the job that becomes redundant, not you personally. In fact, around 270,000 people¹ were retrenched in Australia in 2019 – and that was before the COVID pandemic saw a massive spike in unemployment and underemployment rates.

A redundancy isn’t a reflection on your skills and abilities as a worker. Unlike being dismissed for some other reason, it can often result in a payout. (More on this below.) 

Voluntary redundancy and redeployment

Sometimes an employer knows ahead of time that they’ll have to cut a few positions from the team. In this situation, they might offer their employees the chance to apply for voluntary redundancy. This can be great for people thinking of retiring early, or who were already wanting to make a change. They allow those who are open to leaving to do so with a little extra padding in their wallets. Of course, not everyone who applies for a voluntary redundancy will necessarily receive one – there may be more applicants than redundant positions.

You may also be offered another position within the company, instead of a redundancy package. It is up to you whether or not you accept the alternative position being offered (although rejecting a comparable offer may impact what redundancy benefits you are entitled to depending on your employer’s policy and the terms of any enterprise agreement or potentially your employment contract).

Your payout  

You might be eligible for redundancy pay (also known as severance pay) – though the amount will depend on a few things. The National Employment Standards contains details of minimum notice and redundancy pay that your employer must comply with (or provide a greater amount of notice and redundancy pay). According to the National Employment Standards², small businesses aren’t required to offer redundancy pay, and casual workers or employees who have worked for less than 12 months aren’t entitled to it (and some additional exceptions also apply).

If you are eligible, your payout will depend on factors like how long you’ve worked for your employer. If your job is covered by a registered agreement (such as an enterprise agreement), you should check the terms to see if it states how much you’re entitled to.

Payouts also come with some complex (but often lucrative) tax considerations³ to think about. A percentage of your payout is usually tax-free, and some additional payments attract tax concessions, while others don’t. Consider talking to an accountant or financial advisor when calculating how much money you might take home. 

Other buffers

Many people forget that their insurance policies might have some benefits they can claim in a time of financial instability, including redundancy benefits. Investigate your policies and superannuation fine print to see if you might be eligible for any salary protection. 

Often, the most stressful part of changing jobs unexpectedly is keeping up with your debt repayments. If required, make sure you get in touch with your loan providers or mortgage brokers to see if you can adjust your schedule to give you time to meet your obligations. If you’re ahead on any repayments, you may be able to pause them for a while. These kinds of circumstances highlight the importance of having an emergency savings fund, and keeping a working budget so you’re prepared for any discussions about assistance.  

If you’re a permanent resident or citizen, you may also be eligible for benefits from the Government while you seek out your next role.

Getting help 

Whether you’re thinking of looking for another job, considering retirement, or just want to take a deeper look at your finances to understand your options, there’s plenty of support out there to guide you through your redundancy. Here are a few places to start:

• Searching for a new job: Being back in the job market can be daunting, but there’s a great deal of help available. The Department of Education, Skills and Employment has an Employment hub⁴ which contains extensive career-planning tools, while the government’s JobSearch⁵ site has a host of information about pay rates and  growth industries job vacancies. 

• Thinking of retirement: Perhaps the most fun of all the redundancy options, early retirement can be a well-earned gift to the worker at the end of their career. But it also comes with its own concerns and considerations. To make sure you’re properly set up for retirement, you might choose to consult with a financial adviser. Speaking of which…

• Seeking financial advice: When you’ve been retrenched, the best investment you can make is in seeking the right advice. You might seek out an accountant, or a financial planner to help you game out the next phase of your life. The ideal financial planner will take a holistic view of your circumstances and work with you to develop a plan.