Over a 12-month period, approximately two million Australians left their job and of those nearly one in five were made redundant1.
Given the stats, it’s easy to conclude that many people will be faced with redundancy at some point, which is why we’ve pulled together the financial and non-financial considerations to tackle early on.
After all, whether the idea of retrenchment has you concerned or over the moon, there are things you’ll need to address before you secure your next role.
1. Know what you’re entitled to
A genuine redundancy payment is made when you’ve been retrenched because there is no longer a need for the job you’re doing.
If you’re under age 65, special tax treatment is also given to genuine redundancy payouts, which means any payments you receive will be tax free up to a certain limit based on your years of service.2
What your employer is required to pay you will depend on your conditions of employment, so check your redundancy payment summary carefully to ensure you get what you’re owed.
If you’ve lost your job and are still owed employee entitlements because your employer has gone into administration or liquidation, you may be able to get financial help from the Australian Government.3
2. Weigh up your financial situation
The size of your payout may determine the time you can afford to be out of work, what you’ll be able to live on from week to week and how you’ll tackle financial responsibilities until you find another job.
With that in mind you may want to:
Create a workable budget
You can do this by writing down your daily living expenses, and what you estimate any upcoming bills and loan repayments will total. This way you’ll be across all of your outgoings, as well as where you may be able to make minimum repayments and cut back on other forms of spending.
Put your money somewhere useful
It might be tempting to go on a holiday, undertake renovations or pay off existing debts with your redundancy packet, but if you don’t find work within a certain timeframe, you may leave yourself short.
Think about where you could put your money, still have access to it and potentially reap added benefits. Options may include high-interest savings accounts or a mortgage offset account that allows you to redraw funds while reducing what you pay in interest on your home loan.
Apply for financial hardship with your lenders
If your redundancy payout does start to run out and you’re struggling to make repayments, you may be able to seek assistance from your lenders by claiming financial hardship.
All providers must consider reasonable requests to change their terms in instances where you may be suffering genuine financial difficulties and feel help would enable you to meet your repayments, possibly over a longer period of time.
Know government assistance rules
You won’t be eligible for Centrelink benefits for the period of time you’ve been paid for as part of your redundancy. You may also have a 'liquid assets waiting period' based on any assets you have that could be used as income.4
Note, your eligibility for payments will also depend on your partner's income.5 For more information and to request payment assistance, contact the Department of Human Services.
Look into your super situation
See how much money you have in super and think about the effect a break from work may have on your balance. If you have insurance inside super and are paying premiums with your super money, also consider how this may affect you if your retirement savings are not being offset by contributions.
3. Create a plan for your return to work
You might have a bit of leeway to take some time off, but when you do look to join the workforce again, a good place to start will be your resume. Make sure your previous roles and responsibilities are up to date and that you’ve listed all your skills and achievements.
In the meantime, set up relevant online job searches, tidy up your LinkedIn profile, touch base with recruiters in your field and don’t be afraid to target companies directly.
And, if you’re lucky enough to have found a role and still have money from your payout leftover, think about ways you may be able to invest it.
4. Contemplate the benefits of training
Depending on whether you want to remain in your industry or make a career change, further training could help you gain new qualifications, keeping in mind this can still cost time and money.
5. Seek further assistance
You may wish to speak to your financial adviser and if you don’t have one you can use our find an adviser tool to locate one in your area.
If you’re after additional tools and resources:
Managing your money
Find out how you can make a big difference to the opportunities and lifestyle you enjoy today and tomorrow with our online module.
According to research, forking out money on experiences, time and other people is the way to go.