Protect Severance - Coronavirus COVID-19 Update
Protect’s role in the industry is to support members in times of difficulty in relation to their employment. Our members may have entitlements secured with us in the event their position is made genuinely redundant or otherwise terminated. Members may also have the coverage of our income protection insurance. The Protect Injury & Sickness Cover- Coronavirus COVID-19 Update can be found here.
Severance & redundancy payments
IF YOUR EMPLOYMENT IS TERMINATED:
You will be able to claim a termination or genuine redundancy payment from your Protect account. Lodging a claim online via our website or the App, is the quickest method of dealing with claims.
- There are no changes to the tax free component of a genuine redundancy payment.
- Upon making a claim, a worker will still be entitled to claim payments to the value of their full account balance.
In order to responsibly manage the fund, some changes have been introduced to smooth cash flow while maintaining workers’ full entitlements. We expect these to be temporary measures to assist in dealing with an expected large increase in claims.
- Initial claims due to genuine redundancy will be paid to a limit of $6,500.
- Every five weeks afterwards, a subsequent claim will be paid up to a limit of $10,000 per instalment automatically, until the tax free component is reached.
- If you were unemployed for the first 5 weeks since your redundancy, the balance above the tax free component will also be paid.
Please note: claim tax treatment is unchanged.
Genuine redundancy example:
This year’s tax free threshold set by the ATO is $10,638, plus $5,320 for every year with the employer.
A worker with a balance of $50,000 who has worked with their employer for 7 years,
would have a tax free component of $47,408. Payment would be as follows:
- Initial claim upon genuine redundancy $6,500.
- Every five weeks, a payment of up to $10,000 until the tax free component is reached.
- If unemployed after the first five weeks, the taxable balance would then be payable. In this example, $50,000 less $47,408, or $2,592 before tax is payable.
IF YOU ARE STOOD DOWN BUT REMAIN EMPLOYED:
To help counter the financial hardship caused by the COVID-19 Coronavirus, Protect has been granted approval by the Tax Office to make a hardship payment from the account balance of workers who remain employed but are stood down without pay and are not relying on other forms of employer payment such as annual leave or long service leave. Hardship payments are available even if JobKeeper payments apply. Where a worker is terminated and is unemployed, a termination or redundancy payment would apply.
Protect is able provide up to two payments of up to $2,000 each, with five weeks between payments. Payments are subject to 32% tax (includes Medicare levy) as per ATO rules. Payments will be deducted from your severance account balance and rely on you having sufficient funds in your account.
An application for a hardship payment can only be made electronically via the Protect website. These applications cannot be made via the Protect App. You will be required to provide the following information:
- Your full name
- Your address
- Your date of birth
- Your Protect member number
- Your employer
- Your banking EFT details
- Your tax file number – note, where a tax file number is not provided, the payment will be taxed at the highest marginal rate, currently 47%
- The expected dates of stand down, if known
You must also declare that you have been stood down from work without pay due to COVID-19 coronavirus and you are not receiving any other forms of payment from your employer or from other agencies in relation to long service leave, annual leave or RDOs. Access the hardship payment application form from our website.
Dedicated Counselling Phone Number
Protect counselling is a free confidential service for individuals seeking support, as well as employers and workers wanting advice on the best method to assist colleagues dealing with a range of concerns: