Reasons to think before you spend that redundancy payment
As a legal firm who deal with many employment matters including redundancy, we often meet with clients who are dealing with being made redundant from their current employment. As part of the process of redundancy, the client will receive a payment from their previous employer and for some clients, this can be a considerable amount of money.
Whilst we do not give financial advice, we do recommend that our clients, especially when their final payment is a substantial sum of money, seek professional advice as to what the best use of this lump sum of money is and what actual role the money will play in sustaining them until new employment is secured.
The expectation of your redundancy payment from a Centrelink point of view, is that the lump sum payment is to support you whilst you are job-seeking. The income-maintenance or preclusion period is equivalent to the number of weeks pay you received when you were made redundant i.e. 8 weeks redundancy pay will mean a preclusion period of 8 weeks. The preclusion period is the possible period of time you will not be entitled to Centrelink benefits. When put in this light, it is even more important that advice is sought to enable you to ensure that the lump sum is used wisely and viewed in the correct light and not as a “lotto win”.
Should you find yourself in a situation where you have received a large lump sum payment, Centrelink does advise however that “any portion of a redundancy payment that's rolled over into deferred annuities, super bonds, super schemes, allocated pensions or approved deposit funds is not included when calculating the income maintenance period.” This highlights even more so, the need for you to obtain professional advice to ensure your redundancy payment is working for you in the most effective manner.
Further information on redundancy payments can be found on the Centrelink website
If you need to discuss your redundancy, please contact us.Back