Redundancy can be stressful at any time. Fuelled by the uncertainty of COVID-19 (coronavirus), it’s tempting to feel it’s all just too hard and escape to the welcoming arms of Netflix. But if retrenchment is on the horizon, there are some things you can do to take control and prepare for the future.
In April, Australia hit its highest jobless total since September 2015. With the Federal Treasurer expecting an unemployment rate around 10 per cent at the end of the year¹, the threat of recession is hitting Australia harder than many of us remember.
Effects of COVID-19
Although COVID-19 has affected all areas of the economy, it’s not the same for everyone. Some sectors have been hit particularly hard. AMP analysis finds that recruitment, retail and hospitality make up almost half of all early super release withdrawals, suggesting that people in these areas are heavily affected by job loss.
Uncertainty around the reopening of interstate and international borders makes any tourism rebound hard to predict, along with future employment prospects.
Here are some ways to help make sure you get what’s yours and prepare yourself for the future.
Know what payout to expect
It’s a good idea to get clear on the terms of your redundancy, so you know what’s ahead. Your redundancy payout is based on continuous service with your employer, but terms can vary, so check your contract or ask your employer if you’re unsure.
If that’s not feasible or you’re still unsure, Fair Work’s redundancy calculator can help you find what redundancy pay and entitlements to expect. You just need to answer some questions about your employment. It’s also a good place to find details of pay and conditions if you’re covered by a registered agreement.
It’s often easier to confirm what you’re entitled to before you leave your job, so if you’re still working, now’s the best time to think about confirming.
If you’ve been working for a small business that may not be in a position to pay your redundancy, or you’re facing acute problems brought on by COVID-19, then you can find guidance in our financial hardship section and ASIC’s Moneysmart.
Get across the big picture and get onto budgeting
Your redundancy payout is only one component of your financial situation. With restrictions on travel in place you may be less tempted to blow any lump sum on a cruise to Tahiti. Which is good, because in tighter economic times it makes sense to make sure every dollar works hard for you. This is why creating a budget may be helpful.
It’s natural to concentrate on money coming in, but that’s only part of the wealth equation. It’s also a good time to look at your spending and plan for any adjustments you might make. The size of your payout may affect how long you can afford to be out of work and support your present lifestyle.
Online tools such as AMP’s budget planning calculator or Moneysmart help you get a better understanding of your finances straight away and what you’ll be able to live on week to week. The price of keeping Netflix might be only a couple of takeaway coffees a week, but it helps to see how this fits in with paying utility bills or keeping a car on the road.
Following some simple principles you can create a budget in 3 easy steps that suits your real life situation. You can adapt your plans to suit your short and medium-term prospects. If you have My AMP or visit our website you can use Money Manager to include your non-AMP accounts in your plan. A better view of where your money is going can help you identify where you can cut back.
As well as this, it’s important to know that redundancy can affect your future super and any associated insurance you might have, so you may want to include provisions in your budget to cover any shortfall.
There’s a range of Federal and State government assistance available related to COVID-19. Make sure you’re across these and don’t miss out on support you might be able to access straight away.
These may change as the economy emerges from hibernation, so bookmark the pages relevant to you, in case you’re out of work for longer than you anticipate.
Be aware that there’s also education assistance available if you think now’s the time to improve your skills via higher education. A number of free online courses are also available from TAFE to help you reskill for your next job. Open University also offers a range of short and longer education for all levels at no cost.
Where to get personalised assistance
If you’re experiencing a redundancy and want to ask questions of an expert, you can join the free AMP webinar Managing through a redundancy. We’re all different, so this is a good place to find answers to the questions you want to ask.
You can also register for webinars on related topics, such as if your retirement plan is off track due to market volatility, and estate planning.
Other help to consider
If you have a financial adviser, talk to them if you haven’t already. If you don’t yet have one but think a redundancy payment means it’s the right time to seek professional help, you can find an adviser who’s right for you.
You can also find a range of articles on our COVID-19 support hub, covering everything from practical tips to the latest market outlook.
If you’re experiencing financial difficulties, you can find some great resources on the Moneysmart website. If you need help managing your debt or understanding your rights and entitlements during hardship, you can contact the National Debt Helpline on 1800 007 007.
If you’re experiencing any emotional distress during these difficult times, please know that help is available. You can find someone to speak to on our support pages.
¹ ABC News, 13 April 2020
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