No matter what experience you have or the industry you’re in, the hundreds of thousands of job losses over the past few months have proven that no one is safe from redundancy.
And while it is a stressful position to find yourself in, author, accountant and finance expert Dr Adrian Raftery says redundancy doesn’t have to spell disaster.
“With most of the economy showing signs of weakness in the face of COVID-19, one consequence of a slowing economy is that more people are likely to experience redundancy,” says Adrian. “Redundancy is a stressful event, but if it happens to you, there are ways in which its impact can be reduced.”
Your legal rights
“There are strict guidelines that employers must follow when dismissing an employee due to redundancy,” says Adrian. “If you feel that you have been unlawfully terminated or dismissed, for example discrimination based on as sex, race, sexual preference, the Fair Work Commission can provide an overview of your rights.”
If you intend to make a claim about your termination, it must be lodged within 21 days of receiving notice. You can find out more here.
Get the tax right
“Redundancy payments provide many people with a welcome lump sum and bona fide payments receive special tax treatment,” says Adrian.
The tax-free limit is currently $10,989 plus a further $5,496 for each completed year of service, Adrian explains. Anything in excess of the tax-free amount is treated as an ‘employment termination payment’. The first $210,000 of an employment termination payment is taxed at 17% if you are over 57, or 32% if under 57. Any payment in excess is taxed at 47%.
As a redundancy payment may be the last pay cheque you receive for some time, it’s important to make sure it’s put to good use. This is where budgeting comes to the fore.
“When money is tight, it’s time to reassess the difference between needs and wants,” says Adrian. “Budgeting can be a chore, so why not approach it as a game? Get the family involved, and you’ll be surprised where you can find savings. Don’t treat your situation as all doom and gloom – decide now how the family will celebrate when things get back to normal.”
“Managing debt is a vital part of the budgeting process,” says Adrian. “Talking to your lenders from the start will give them the greatest opportunity to help you. Good financial advice is crucial at this time, so make a point of getting in touch with your adviser as soon as possible.”
Many companies provide employees with outplacement assistance to help them find a new job, so make the most of any offers.
“This is a chance to review your career path, to try a new direction, or maybe to start your own business,” says Adrian. “Redundancy is the trigger for many people to undertake training in areas quite different to their previous occupation.”
“Redundancy results from events beyond individual control, but it’s still easy to feel a sense of personal rejection,” says Adrian. “In addition to support from your families, it’s important for anyone going through redundancy to seek any help you may need in dealing with the emotional upheaval that can occur at this time.”
Here are just a few places Adrian recommends for finding help:
- My Future www.myfuture.edu.au provide practical information on careers and tools to help formulate an action plan to secure your new career.
- Centrelink www.servicesaustralia.gov.au offer a free career information centre with information on training & education.
- Job Outlook www.joboutlook.gov.au provide a detailed look at a range of occupations and their education and training pathways.
- Fair Work Ombudsman www.fairwork.gov.au give information on specific entitlements under various awards and workplace agreements.
- Fair Work Commission www.fwc.gov.au offer an overview of your rights and the steps involved if you feel you have been treated unfairly.
- Relationships Australia www.relationships.com.au provide support if employment issues are affecting your relationship.
- Family Relationship Services Australia www.frsa.org.au are a Federal Government funded organisation that provides family support.
- Lifeline Australia www.lifeline.org.au offer useful information and counselling services about dealing with trauma or providing care in times of crisis
“As stressful as redundancy is, it can be a great opportunity,” says Adrian. “Many people emerge from the redundancy experience with fresh motivation, happily embracing a new career.”