Understanding Redundancy

Today, workers don't have the same job security as previous generations. Gone are the days when people spent their entire lives working for the same company. While it may be easy to dismiss the current situation as the fault of employers, the truth is more complicated than that. The current recession, outsourcing of jobs to other countries, and the use of technologies that minimize the manpower required to accomplish a task are just some of the reasons behind this. We will discuss the topic further in the following paragraphs, so read on.

Why Redundancy Occurs

Aside from the reasons we mentioned earlier, there are more reasons why redundancy occurs in the workplace. Here are some of them:

  • Reduced profits. It could be that the company you're working for is in an industry that is on a steady decline or has increasing competition. Either way, these factors could severely affect your company's finances up to a point where your employer could no longer afford to pay your salary and that of your co-workers. He will therefore be forced to cut jobs in order to keep the business profitable and avoid going bankrupt.
  • Shift in focus. In the United States, traditional bookstores have succumbed to the dominance of online stores such as Amazon. Using this as an example, it is also possible that your employer is suffering heavy losses in the current industry that they are in, that they have decided to focus on other, more profitable types of business instead. Worse, your current position isn't required in that new business. Your employer will thus have to render your services redundant and let you go.

We can see that, oftentimes, there are real reasons that compel employers to cut down their workforce. These are difficult business decisions they have to make in order to maintain their livelihood.

What Redundancy Means to You

When you lose your job, you also lose your source of income. You become in danger of defaulting on your mortgages and in paying your bills. The good news, however, is that you can protect yourself from redundancy in a number of ways. First, of course, is by saving money for emergency situations. Another option is by applying for Redundancy Insurance. This will cover your expenses for up to 6 months if you lose your job due to redundancy. Keep in mind, however, that there is a 30-day waiting period from the time you become unemployed until you become eligible to claim your first monthly benefit. During this period, you will have to rely on your savings for your daily expenses.

You can find out more about how Redundancy Insurance protects you from sudden unemployment with the aid of our professional advisors at Rate Detective. They will help you find the right plan based on your salary and your lifestyle. In addition, they will provide you with a comparison of 12 of the largest insurers in Australia in order to ensure that you get the right balance between price and coverage.

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Published on October 10-nd, 2012 in Insurance
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.

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