What to Do When Losing a Job Due to Coronavirus COVID-19

The impacts of COVID-19 are likely to have a substantial impact on Australian businesses, seeing many having to significantly reduce their staff numbers, or otherwise being forced into liquidation (bankruptcy). It is important here to note that employees will still have rights and options available to them to recover any amounts owed to them in the event of a termination of their employment. This is different to situations whereby an employee has been stood down from their employment, which does not generally constitute a termination. For more information on being stood down, please read the following article (Novel Coronavirus COVID-19 and Australian workplace laws).

The following non-exhaustive options are available to employees if their employment is terminated. Importantly, it must be noted that every termination of employment must be assessed on a case by case basis, and that the circumstances surrounding the termination may lead to different outcomes or options being available. This may include whether an Award or Enterprise Bargaining Agreement (EBA) applies.

Rights to statutory entitlements;
Redundancy payments; and
Fair Entitlements Guarantee payments.

Statutory entitlements

Upon termination of an employee’s employment, employers are generally required to pay the following statutory entitlements:

unpaid wages, including any amounts owing to you from the business;
appliable notice pay;
unused annual leave; and
accrued long service leave (eligibility requirements apply i.e. passing the minimum term of employment).

Failure by a business to pay to an employee their statutory entitlements is an offence under the Fair Work Act 2009 (Cth) and makes the business, as well as any person knowingly involved in the contravention, liable for civil penalties.

Redundancy payments

An employee’s employment may become redundant when an employer either decides they no longer need an employee’s job to be done by anyone, or the employer becomes insolvent or bankrupt, and terminates their employment. It is important to note here that the employee’s role is no longer required, which is different to the employee themselves being terminated for performance reasons.

The amount of redundancy pay available to an employee will depend on the length of their continued service to the employer (see below table). This may change depending on any applicable Award or EBA and does not generally include any bonuses, overtime/penalty rates or other amount outside of the employees usual base rate of pay.

Period of continuous service	Redundancy pay
At least 1 year but less than 2 years	4 weeks
At least 2 years but less than 3 years	6 weeks
At least 3 years but less than 4 years	7 weeks
At least 4 years but less than 5 years	8 weeks
At least 5 years but less than 6 years	10 weeks
At least 6 years but less than 7 years	11 weeks
At least 7 years but less than 8 years	13 weeks
At least 8 years but less than 9 years	14 weeks
At least 9 years but less than 10 years	16 weeks
At least 10 years	12 weeks

It is important to note that not all employees are eligible for redundancy payments. The following persons are not generally able to receive redundancy payments:

employees whose period of continuous service with the employer is less than 12 months;

employees employed for:
1. a stated period of time;
2. an identified task or project; and
3. a particular season,

employees fired because of serious misconduct;

casual employees;
trainees engaged only for the length of the training arrangement;
apprentices; and
employees of a small business (where the business employs less than 15 employees).

Fair Entitlements Guarantee

When a business goes into liquidation or insolvency (bankrupt), employees can get help through the Fair Entitlements Guarantee (FEG). The FEG is a legislative safety net scheme of last resort with assistance available for eligible employees.

If you are an eligible person, you may claim:

your unpaid wages—up to 13 weeks;
your unpaid annual leave and long service leave;
payment in lieu of notice—up to five weeks; and
redundancy pay—up to four weeks per full year of service.

To be an eligible person, you must:

have lodged an effective claim within 12 months (of either the date you lost your job or the date of the liquidation or bankruptcy of your former employer);
have lost your job due to the insolvency of your employer or were terminated after, or within six months before, the appointment of a liquidator or bankruptcy trustee for your employer;
are owed at least one of the entitlements mentioned above; and
were an Australian citizen or the holder of a permanent visa or special category visa that allows you to stay and work in Australia at the time your employment ended.

You may not be eligible if you were:

were a contractor;
were a director of the company within 12 months before liquidation;
were a relative (as defined by the Corporations Act 2001) of an employee director of the company within 12 months before liquidation; or
do not meet all of the conditions of eligibility set out in the Fair Entitlements Guarantee Act 2012.

We also encourage those persons who have lost their employment to contact the Department of Human Services so as to assess their eligibility for any Centrelink benefits by following this link.

The above has been provided for your information and is not to be relied upon as legal advice. Advice may differ depending on a number of factors, including the continued updates from the government.

LGM Advisors is a leading commercial litigation Melbourne professional law firm, the experts to contact when you require commercial lawyers and employment lawyers. LGM Advisors have the skills, experience and expertise to ensure that you and your dispute is consulted upon with the utmost professionalism. Contact LGM Advisors today on (03) 9832 0608 or by email at contact@lgmadvisors.com.au.

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What to Do When Losing a Job Due to Coronavirus COVID-19