Redundancy While on Workers Compensation Victoria: What You Need to Know

Redundancy While on Workers Compensation Victoria

Being made redundant while receiving workers compensation in Victoria does not automatically stop your payments, but it changes how your entitlements work. If you were injured or became ill because of your job and are receiving weekly payments under the Transport Accident Commission (TAC) or WorkSafe Victoria scheme, a genuine redundancy requires careful handling. You should expect your compensation to continue in most cases, but the duration, rate, and return-to-work expectations may shift depending on the nature of the injury, the stage of your claim, and your employer's obligations.

Understanding the interaction between redundancy and workers compensation helps you avoid losing money you are owed or triggering a premature closure of your claim. This matters because the system rewards transparency and penalises abrupt changes in employment status that look like an attempt to close a claim early.

How Workers Compensation Payments Work in Victoria

Workers compensation in Victoria is governed by the Transport Accident Act 1986 for transport-related injuries and the Workers Compensation Act 1987 for all other employment injuries. If you are receiving weekly payments because your injury prevents you from working, those payments are meant to replace a portion of your lost earnings. When a redundancy occurs, the core question is whether the loss of employment was caused by the injury or by separate business decisions.

Injury-Related vs. Non-Injury-Related Redundancy

If your role was made redundant for genuine business reasons unrelated to your injury, the redundancy does not cancel your compensation. You are still entitled to weekly payments based on your pre-injury earnings, subject to the statutory caps and waiting periods. However, if the redundancy was a direct response to your injury, for example because your employer claimed you could not perform your duties and then eliminated your position, the situation is more complex and may require a review of the claim's validity.

What Happens to Your Weekly Payments

Once a redundancy is confirmed, WorkSafe or the TAC will typically continue your weekly payments for the balance of the assessed entitlement period. They will calculate your payment rate using your pre-injury average earnings, not the redundancy package you receive. You must notify the insurer promptly in writing about the change in employment status, providing the redundancy notice, termination letter, and any severance details.

Failure to report a redundancy promptly can lead to a suspension or reduction of payments. The insurer may argue that you have a duty to mitigate your loss and seek suitable alternative employment. While the law does not require you to accept a job that is unsuitable given your injury, unreasonably refusing all work opportunities can affect ongoing benefits.

Return-to-Work Obligations After Redundancy

Being made redundant does not remove your obligation to participate in return-to-work planning. WorkSafe Victoria and the TAC expect you to engage with rehabilitation services and consider suitable alternative employment, even if your previous role no longer exists. If you are medically unfit for your prior job, the insurer should assess whether you can perform other suitable work within your restrictions.

Suitable Employment and Light Duties

If suitable employment is offered that matches your medical restrictions, you should attempt it unless your treating doctor advises otherwise. Refusing suitable work without medical justification can lead to a reduction in weekly payments. In Victoria, the concept of suitable employment is assessed based on your injury, your pre-injury skills, and the local labour market, not just your previous specific role.

Redundancy Packages and Compensation Interactions

A redundancy package can include notice pay, severance, and payment in lieu of notice. These payments are generally treated separately from workers compensation. However, if the redundancy package includes future earnings or is structured as ongoing payments, it may offset or reduce your weekly compensation payments because compensation is designed to cover lost earnings, not to create a windfall.

Key Steps to Protect Your Entitlements

When you are made redundant while on workers compensation in Victoria, taking the right steps immediately protects your entitlements and prevents disputes with the insurer.

• Notify WorkSafe Victoria or the TAC in writing as soon as you receive the redundancy notice
• Provide copies of the redundancy letter, termination date, and any severance agreement
• Do not sign any settlement or release documents for the redundancy without checking if they affect your compensation claim
• Continue attending medical appointments and rehabilitation as directed
• Document any suitable work offers you receive and any reasons you cannot accept them
• Keep records of all communications with your employer and the compensation insurer

When to Seek Legal Advice

You should consider speaking to a lawyer experienced in Victorian workers compensation if the insurer questions the genuineness of your redundancy, if your payments are suspended after reporting the redundancy, or if the redundancy package includes clauses that require you to waive future compensation rights. A specialist can review the wording of the redundancy agreement and ensure it does not conflict with your statutory entitlements under the Workers Compensation Act 1987 or the Transport Accident Act 1986.

Being made redundant is stressful enough without the added pressure of compensation complications. Acting early, keeping records, and communicating clearly with the insurer gives you the strongest position to receive the payments you are legally owed in Victoria.