Posted on 07/04/2020
The job losses in recent weeks have been swift and far reaching and whilst most job losses have been in a temporary ‘stand-down’ form, we are also expecting to see an increase in redundancies over the coming months. A redundancy occurs when an employee’s job is no longer required for business.
We know that becoming redundant is an emotional time, especially in such an uncertain environment. We want to make sure that if this does occur to you, a family member or friend, you are prepared.
Statewide Super’s Lisa Palmer, General Manager of Distribution and Advice, has put together her top five tips for navigating redundancy;
Tip 1: Understand what your redundancy includes
Your redundancy payment could be made up of accrued wages, unused annual leave, and a minimum notice period and termination payment. The termination payment is calculated based on the continuous number of full years of service you have had with your employer.
Tip 2: Understanding your redundancy payment and tax
A large portion of your redundancy payment may be completely tax free. The tax free threshold is related to your years of service with your employer. Depending on your financial situation, it may be beneficial to negotiate the timing of the date when the redundancy is effective and when your redundancy entitlement is paid. In some cases, receiving it in a new financial year may result in paying less tax.
Tip 3: Consider the use of your payment from both a short term and long term perspective
- Although it may be challenging in this current environment, you should understand what is needed to fund your lifestyle until you find another job. Have a conservative approach - it will help you plan for how long your redundancy money could last.
- Consider your debts and whether they should be paid off, particularly where there is a high interest rate such as credit cards.
- If you receive a healthy redundancy payment amount and a surplus is likely, consider your long-term needs and how the money should be invested. This may be a great time to invest in further education to help with future employability opportunities.
Tip 4: Understand whether payments from Centrelink are possible
Typically, you will need to serve a ‘waiting period’ before access is available. As the ‘waiting period’ is determined based on your individual circumstances, it is worthwhile contacting Centrelink as early as possible to gain an understanding of this.
Tip 5: Seek advice from a qualified Financial Planner
As well as providing peace of mind, a Financial Planner will be able to guide you through your options and priorities, possibly minimise any tax outcomes and also help you understand how long your money could last.
Finally, remember to take care of your mental state, which is even more important than ever. Talk with others and know that you don’t have to work through this on your own.