Redundancy or Retrenchment

The biggest difference between the two is that retrenchment occurs when an employee loses their position and cannot be redeployed because no other suitable positions exist. It mainly targets people, whilst redundancy targets positions and occurs when a specific position within a business is no longer required. In this situation, an employee may be redeployed to another position where suitable. If they cannot be redeployed, they may be retrenched. A person cannot be declared redundant but a position in which a person is holding can be declared vacant

When a redundancy happens the main questions always asked are…

  1. How will I pay my bills and put food on the table until I find another job?
  2. What happens to my superannuation and do I need to move it to another fund?
  3. How will I meet my home loan repayments?
  4. What should I do with any “left over” redundancy pay while I find another job?

The right advice

If you’re unsure if you’re financially able to retire or do you want to consider what your options are?

The advice of a qualified professional can help you decide. They can also advise on the best way to manage the payments you receive and provide guidance to make the most of your redundancy.

Guidance can be provided on a range of topics relating to your redundancy, including:

  • How to improve your cashflow
  • How to manage your investments
  • Reviewing your debt
  • Considering your estate planning needs

Redundancy can often bring with it feelings of fear, sadness and loss. Speaking with a professional may alleviate the stress related to the financial uncertainties of your situation.

Redundancy happens when an employer either:

  • doesn’t need an employee’s job to be done by anyone, or
  • becomes insolvent or bankrupt.

Redundancy can happen when the business:

  • introduces new technology (e.g. the job can be done by a machine)
  • slows down due to lower sales or production
  • closes down
  • relocates interstate or overseas
  • restructures or reorganises because a merger or takeover happens.

What’s a genuine redundancy?

A genuine redundancy is when:

  • the person’s job doesn’t need to be done by anyone
  • the employer followed any consultation requirements in the award, enterprise agreement or other registered agreement.

When an employee’s dismissal is a genuine redundancy the employee isn’t able to make an unfair dismissal claim.

A dismissal is not a genuine redundancy if the employer:

  • still needs the employee’s job to be done by someone (e.g. hires someone else to do the job)
  • has not followed relevant requirements to consult with the employees about the redundancy under an award or registered agreement or
  • could have reasonably, in the circumstances, given the employee another job within the employer’s business or an associated entity.