Are you facing possible redundancy?
The COVID 19 Pandemic has changed our world for ever. For most people change is difficult to cope with but especially a major financial change that’s outside of your control, like forced redundancies.
As I write this paper (August 2020) Australia is really only just at the start of its first recession in over 25 years and we do not know its length or depth. Many businesses, large and small are therefore considering their options when planning for the next 12 months. For many, reducing staff may be their only means of survival – hence offering/making positions (staff) redundant.
If the terms ‘voluntary redundancy’ or ‘genuine redundancy’ are being used around your workplace, it’s important to find out as much as you can, or at least to be prepared and consider your options.
This paper will not give you all the answers but hopefully enough information to give you some direction. In it, I discuss what redundancy is, what you need to consider if you are facing redundancy, and who can help.
Don’t take it personally
Facing redundancy is often an emotionally stressful time full of uncertainties. You may feel a range of emotions from sadness and anger through to relief or even excitement.
A big part of the redundancy process can be understanding what’s happening and why. It can help to acknowledge that the decision isn’t personal – there’s a logical, commercially driven decision behind what is happening. Knowing what has lead to redundancies can help you to see that the decision wasn’t a personal one. Right now you can really blame the COVID 19 Pandemic.
Time to reassess your career (life) goals
While we hesitate to say redundancy is a ‘good thing’, it can present the opportunity to help you take stock of your skills, talent, and experiences. You can finally take time to consider:
- Is there anything you want to change in your career?
- Have your goals remained the same, or is now the chance to start on a new journey?
Changing jobs or career paths can provide the chance to readdress your work/life balance if your old role left you feeling exhausted, stressed, or on the path to burnout.
Gather your “A Team” to help you manage your stress and concerns
Facing redundancy may feel daunting, but you’re not alone. There are people with diverse talents ready to help you:
- Speaking with your loved ones can be a crucial part of the redundancy process. It’s important to be as open and honest with your partner as early on as you can. Together, you can tackle any financial or emotional worries; you don’t have to face these alone.
- Speak openly to your financial adviser about all your concerns. A good financial adviser can not only number crunch and seek the best financial options for you but also be a great ear to listen to you. An experienced adviser will have dealt with every type of financial crisis and person can go through and can guide you with experience both financially as well as emotionally.
Tax must be considered as you will also be paid out holiday leave and long service leave. Tax may become an issue but can also be managed or reduced. Seeking advice from an experienced financial adviser and tax accountant can be worthwhile with costs being offset by potential tax savings. An experienced adviser can guide you through the financial elements to possibly reduce tax and map out a plan.
- While discussing your option with friends and family can be helpful, talking things through with an impartial, outside person can be a big help in creating clearer goals and identifying what you want from your career (and life) as a whole.
- If you aren’t sure where your passions lay, what you want to do next, or what your long-term goals are, working with a personal development coach can help. A coach may be able to help you set goals, track your achievements, and start recognising your progression.
- A career coach can help you in a number of different ways, from improving your CV to teaching you how to identify and overcome obstacles to your career progress.
Seeking advice from your “A Team” is important. It can often turn a stressful and overwhelming situation around and shine a positive light to the future.
Redundancy process
There are some basics to know and a process to be followed for redundancies in Australia.
- Your first step is to know your legal rights.
Your employer has a set of requirements they are legally required to follow before they can begin the redundancy process. It’s your employer’s responsibility to clearly lay out their grounds to make you redundant. During the process, they will have to give you certain information about why the redundancy is occurring, how many people will be affected, which areas of the business it will impact, when redundancies will happen, and how your redundancy payment will be calculated.
Voluntary Vs Genuine
I might just start by stating there is a difference between a Voluntary Redundancy and Genuine redundancy.
A voluntary redundancy occurs when an employer asks an employee to sign an employment termination agreement in exchange for financial compensation. Voluntary redundancy is usually offered to employees who have already rendered more than 10 years of service or senior employees. These are being offered widely right now.
Usually the financial incentive offered to an employee to accept a job termination is less than what may be paid under a genuine redundancy (which is legislated). The incentive payment is calculated as ‘X weeks payment’. The tax incentives are also greater with a genuine redundancy (you pay less tax).
For genuine redundancy payments up to AU$10,155 plus AU$5,078 for every year of completed service is tax free.
You can do your own calculation comparing Genuine Redundancy (what an employer must pay X weeks payment) to the Voluntary Redundancy offered using this link: https://calculate.fairwork.gov.au/endingemployment
More information about redundancy and your rights is available at:
https://www.fairwork.gov.au/ending-employment/redundancy/redundancy-pay-and-entitlements
2. Decide if you will accept voluntary redundancy if offered
If voluntary redundancies are being offered, you can decide to accept the voluntary offer or to wait it out for the (possibly more generous) genuine offer (remember you then do not have a choice).
3. Consider short and long term implications
Once you know what you’re entitled to (and when you’ll be paid), you need consider the short term immediate implications and the longer term implications to your household finances.
Short term implications are simple – how can you afford to live and for how long? A budget is essential when making these decisions. You can complete one using either of the following tools:
https://moneysmart.gov.au/budgeting/budget-planner
Then consider the longer-term implications. This will be different for everyone depending on age – family situation – debt position. It’s often worth the time and cost to speak with a licenced and experienced financial adviser to help reduce the possible overwhelm of piecing together the information needed and decision to be made.
4. Give it time but start the search
For most, finding new work will be necessary. Searching for a new job can be daunting.
To set yourself up for success, it’s important to make sure your CV is up to date. Take the time to consider all of the skills, tasks and achievements from your last role, and how you can take these forward into a new position.
It’s not just about stuffing keywords into your CV in hopes you’ll be picked by online algorithms – your CV gives you the space to showcase your accomplishments, experience, and personality. It’s not just an overview of how your career has progressed and developed – it’s the opportunity to show how well rounded you are as a candidate.
While you’re at it, tailoring each cover letter to suit each role is key. Having templates can be handy, but it’s important to personalise each cover letter with details about the specific role you are applying for, what they are looking for, how you fit the criteria and why you’re interested in the role. Simple details like making sure you get the hiring manager’s name right can help create a good first impression.
If you’re sure how to get started, there is plenty of help available to assist you.
There is life after redundancy
Redundancy doesn’t need to be something feared. With the right team around you, you will have the knowledge, plan and cheer squad to get you through to a new and exciting future built on your terms.
We at Kelly Wealth consider it a privilege to help our clients through all that life can bring by helping you through not just the technical financial rules and regulations that apply to your finances, but the emotional and practical issues that arise when your life plans change or are interrupted. If you or someone you know is facing redundancy, we’re here to help.
