WorkCover and redundancy

This page will explore issue of a redundancy and how it impacts on a WorkCover claim in Victoria.

Firstly, what exactly is a redundancy?

In short, redundancy is a way for employers to terminate employees.

A redundancy occurs when the job that you’ve been doing is no longer required to be done.

It is different to a termination termination from employment means that you are being terminated from the role.

Whereas a redundancy means that your job is no longer required to be done.

That is, your job ceases to exist.

A person may be made redundant for organisational reasons such as downturn in production or sales, economy in general, a relocation of business, business being sold or merging with another company or an internal restructure.

A redundancy can be involuntary or voluntary

Involuntary redundancy means that the decision to make you redundant is with the company only and you don’t get the choice as to whether you’ll be made redundant or not.

Voluntary redundancy means that you have the option to put your hand up to accept a redundancy.

Under a redundancy, what are you entitled to be paid?

Under a redundancy, you are required to be paid redundancy pay by your employer.

How much redundancy pay you should be paid is going to be covered under either an enterprise agreement, contract with your employer, a policy of your employer or if none of the above, then under the NES which is the National Employment Standards.

In addition to this, you will be entitled to the payment of notice pay and as to the appropriate amount of notice pay, the minimum amount is:

• for up to 1 year of service with an employer is one weeks pay.
• 1 to 3 years of service is a minimum of two weeks pay.
• 3 to 5 years of service is three weeks minimum and more than five years of service is four weeks minimum.
• If you are over the age of 45 with a minimum of two years of continuous service with this employer then the employer must give you an additional two weeks pay.

In addition of this, you are also entitled to your accrued employment entitlements with the exception of sick leave (in some cases sick leave will be paid but this must be allowed for under an instrument such as an EBA or an employment contract).

What happens if you are made redundant while on WorkCover?

In some instances, a redundancy may result in a preclusion period where you will not be entitled to be paid weekly payments under your WorkCover claim.

However, generally speaking, if your date of injury is after April 2010, a redundancy should not impact your entitlement to WorkCover weekly payments.

If you are made redundant, you should consider getting legal advice to make sure the redundancy amount you’ve been paid meets the minimum amounts required to be paid (and that the redundancy is genuine), and also for specific advice in relation to how the redundancy payout may impact your WorkCover claim.

Voluntary redundancy and WorkCover

If you have a WorkCover claim on foot and you wish to apply for a voluntary redundancy as offered by your employer, you need to be aware of the potential impact that a voluntary redundancy could have on your WorkCover entitlements.

If you receive a lump sum by way of a redundancy, regardless as to the amount you receive, the insurer could seek to impose a preclusion period in relation to your entitlement to receive WorkCover weekly payments. 

This means that for a certain period of time, you’d be precluded from receiving weekly payments from WorkCover.

Noting however that if your date of injury is after April 2010, a redundancy should generally not impact your entitlement to WorkCover weekly payments.

This area can be complex and as such it is very recommended that you should seek legal advice or speak to a financial adviser and obtain advice specific to your circumstances.

If your entitlement to weekly payments has been terminated either as a result of applying for a voluntary redundancy or obtaining a voluntary redundancy, then you can appeal this decision via the WorkCover conciliation process which is explained here.

A voluntary redundancy can allow a person to leave their employment on good terms while at the same time, receiving financial compensation.

It can sometimes be a good option for employees who might be close to retirement age or for people who are unhappy in their current position and looking to pursue a career change.

Many organisations will offer financial incentives to people to encourage them to accept a voluntary redundancy.

What about a WorkCover claim after redundancy?

You are able to pursue a WorkCover claim after you have received either a voluntary or involuntary redundancy payment.

And you’ll be entitled to the same benefits under WorkCover as a person who has not had a redundancy payment.

However, as mentioned above, when you receive a redundancy payment it is possible that could be  a preclusion period where you are not able to obtain weekly payments from WorkCover for a certain period of time.

If you are in receipt of weekly payments while you have a WorkCover claim on foot and then obtain the redundancy payment, the preclusion period will generally start from the date of the redundancy.

However, in the circumstances where you have obtained the redundancy first and then later lodged a WorkCover claim, the preclusion period begins from the date that you became eligible for weekly payments even though you may have received the redundancy payment many months earlier.

If you were paid weekly payments after you receive the redundancy to which you were not entitled, then the WorkCover Insurer will likely seek to recover the relevant during the non-entitlement period.

Conclusion

If you receive a redundancy payment while you have a WorkCover claim on foot in Victoria, then you may be subject to a preclusion period where you are not entitled to be paid weekly payments from the insurer for a certain period of time.

Also, your payments may in some cases be terminated by the WorkCover insurer.

You are also able to lodge a WorkCover claim after a redundancy payment but you may again be subject to a weekly payments preclusion period.

If you have received a redundancy payment or are thinking of applying for a voluntary redundancy payment, you should obtain advice legal and/or financial advice specific to your circumstances.