The effect of the Covid-19 lockdown on New Zealand workers has been significant. Businesses across all industries, particularly in the hospitality and tourism sectors, have seen patronage and tourist numbers dwindle. Many employees have faced reductions to their pay or working hours, job losses, or been forced to take involuntary redundancy.
Adding redundancy cover to your insurance plan has never been more important in these times of intense job uncertainty.
Many people mistakenly think their income protection insurance includes involuntary redundancy. It doesn’t. In New Zealand, redundancy insurance is typically an optional extra linked to your income protection cover.
How does Redundancy Insurance Protection work?
Redundancy insurance usually works in a similar way to your income protection insurance. The amount you will receive each month, and the length of time the payments will continue, will depend on your circumstances.
There is usually a waiting period before payments commence, and an insurance broker will be able to talk you through your options and help you choose the best plan for your needs. In addition, they can help you with understanding the eligibility criteria for making a claim and whether subsequent claims can be made further down the track.
Does Redundancy Insurance cover self-employed workers?
Vast numbers of self-employed Kiwis in the trade and retail sectors have been under immense financial strain with Covid-19 restrictions. Many have not survived or are barely staying afloat.
Does the Government Covid-19 Wage Subsidy Scheme and Income Relief package cover redundancy?
The Government’s Covid-19 Wage Subsidy Scheme and Covid-19 Income Relief Payments have provided some financial support for employees however there are no guarantees on how long these payments will continue to be available.
In addition, employees who in good faith have negotiated reduced work hours, or reduced pay to maintain their job, may find they are faced with voluntary or involuntary redundancy in the future.
It’s important for all Kiwi employees to be aware that the various Government relief packages don't include redundancy payments. As outlined on the Employment NZ Government website, ‘An employer cannot use the subsidy to make any contractual redundancy payments to an employee. Redundancy payments should be made in accordance with the provisions in the relevant employment agreement.’
With the potential for Covid-19 to be around for a number of years, as the WHO (World Health Organization) stated recently, having redundancy insurance protection provides financial certainty when you are faced with circumstances beyond your control, particularly in unprecedented times like these.
Seeking expert advice from an insurance broker
As many NZ employees are struggling to understand their employment rights, and finding themselves in financial situations that they didn’t plan for, seeking advice from an insurance broker is hugely beneficial.
As experts, they will provide you with the information you need to know, and answer all your questions as they relate to your specific circumstances. They will be able to explain, in simple terms, what income protection and redundancy protection options are available to you and how they work i.e. what your premiums will be, how long your redundancy cover will last, and how much you’ll receive each month.
Having the certainty of an income to see you through should you be made redundant and until you can find alternate employment, or to enable you to pursue a new career path, has never been more critical.
To find out more about how an insurance broker can help your business, contact NZbrokers today.