Coronavirus: What happens if I suddenly lose my job?

COVID-19 has resulted in hundreds of thousands of job losses. The latest figures from the Australian Bureau of Statistics (ABS) reveal that employment decreased by 227,700 people between April and May. “The drop in employment, of close to a quarter of a million people, added to the 600,000 in April, brings the total fall to 835,000 people since March,” said Bjorn Jarvis, Head of Labour Statistics at the ABS.

Unfortunately those that are in casual positions or are independent contractors will find that there are few benefits that they may be entitled to.

The government’s stimulus packages and the JobKeeper payment go some way to cushioning the blow for those who suddenly find themselves unemployed but many may still struggle to pay the bills.

If you suddenly lose your job but aren’t entitled to a redundancy payment let’s take a look at some of your possible options.

What government support is available?

The JobSeeker Payment, formerly known as Newstart, will effectively be doubled through a “Coronavirus Supplement” of $550 a fortnight until 24 September. This means if you meet the income test (the asset test will be waived) you could potentially earn more than $1100 per fortnight. 

The Coronavirus Supplement will also be paid to both existing and new recipients of Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit.

For the period of the Coronavirus Supplement access to these payments will be expanded to include sole traders, the self-employed, casual workers and contract workers  “who meet the income tests as a result of the economic downturn due to the coronavirus”.

So, for example, if you’re a sole trader who is married and whose income has reduced to zero you would be eligible for the JobSeeker partnered payment of $510.80 per fortnight plus the Energy Supplement of $7.90 per fortnight; plus the coronavirus supplement of $550 per fortnight. This would bring your total fortnightly income support payment to $1,068.70.

If you already receive some sort of government payment such as Family Tax Benefit, carer payment or allowance or are an eligible concession card holder you may also be eligible for two $750 payments. 

You don’t need to do anything to access this money. You should have received the first payment by 17 April 2020. The second payment will be made automatically from 13 July 2020.

TIP: To find out what payments and services you may be eligible for visit servicesaustralia.gov.au and search for their payment and service finder tool.

On March 30 the government announced a JobKeeper payment “to help keep more Australians in jobs and support businesses affected by the significant economic impact caused by the Coronavirus”. Employers are able to claim a fortnightly payment of $1,500 per eligible employee for a maximum of six months.

Your employer will have let you know if they intend to claim the fortnightly payment of $1,500 on your behalf. The payment may be available if you were stood down your employer or if you were employed on 1 March 2020, subsequently ceased employment and then were re-engaged by the same eligible employer.

What about if I can’t pay my mortgage, rent or bills?

Mortgage

Call your lender and talk to them about applying for a hardship variation. This usually comes in the form of frozen repayments, frozen interest rates and/or partial repayments. It is important to note that interest is still added to your mortgage.Many lenders are offering customers affected by COVID-19 the option to ‘pause repayments’.

Rent

Check if you’re eligible for Rent Assistance which are income top-ups to make rent more affordable for low-income earners. You may be eligible if you receive certain payments already.

If you do receive income support you can also check if you’re also eligible for a Centrelink advance payment. These are essentially interest-free loans available to people on a Centrelink income. They are generally available twice every 12 months.

The advance can be up to $500 ($1000 for pensioners), which you repay by fixed deductions from your fortnightly Centrelink payment. This means managing on a reduced income until the loan is repaid.

Another option is to talk to your landlord and/or real estate agent to explain your circumstances and ask for special consideration and what you may be able to do while you’re not working. Although a moratorium on evictions is in place in most states it doesn’t mean you can just stop paying your rent. It’s best to put a plan in place that works for you and your landlord.

Bills

If you can’t pay your electricity, gas, phone or water bill, contact your service provider straight away. They will explain your options, which may include:

• an extension to pay
• paying in instalments
• Centrelink deductions
• applying for a utility rebate or voucher

TIP: Avoid payday lenders. If you are after cash for emergency purchases such as a new fridge or car repairs consider talking to not-for-profit organisation Good Shepherd Microfinance about a no-interest loan (NILS). The scheme provides loans up to $1500 and repayments are arranged over 12 to 18 months. To be eligible for NILS you must have a healthcare or pension card, earn under $45,000.

Can I access my super in financial hardship?

Normally you can only make one early withdrawal due to severe financial hardship in any 12-month period, and if granted access you will be able to withdraw between $1,000 and $10,000. To access this though you need to show that you can’t meet your living expenses and have been receiving Commonwealth benefits for 26 weeks. 

The rules have temporarily changed. Some people will now be able to access up to $10,000 of their super this financial year and another $10,000 in the next financial year. According to the Treasury fact sheet to apply for early release you need to be:

• unemployed; or
• you are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance; or
• were made redundant; or
• your hours reduced by 20% or more; or more.
• you’re a sole trader where business was suspended or income fell by 20%

You will not pay any tax on this money and it will not affect any other Centrelink payments. You can apply for early release by going through the myGov website.

TIP: It’s important to note that accessing your super early will impact on the funds that you have available for your retirement. It’s also worth noting that super balances have dropped considerably so you will be realising those losses.

What about insurance in my super?

There are three kinds of insurance that could be included inside super – life and TPD and income protection. Many Australians mistakenly believe that their income protection policy will cover them in the instance that they lose their job. This is not the case. Income protection insurance is there for you if you become ill or injured and can’t work temporarily. It provides monthly payments to help you get by while you’re not earning your regular salary.

It is possible to buy redundancy insurance which does cover you if you lose your job but this is different to income protection insurance.

TIP: Members have a choice of a 30- or 60-day waiting period. This is how long they’ll need to wait before they start receiving payments. The cost is automatically deducted from a member’s super account. How much their income protection costs depends on their: amount of cover, age, individual work rating, benefit payment period and waiting period.

About Effie Zahos

Canstar’s Editor-at-Large, Effie Zahos, has more than two decades of experience helping Aussies make the most of their money. Prior to joining Canstar, Effie was the editor of Money Magazine, having helped establish it in 1999. She is an author and one of Australia’s leading personal finance commentators, appearing regularly on TV and radio.

Main image source: PKpix (Shutterstock)