Coping with redundancy
The last decade has been good for job seekers. Unemployment has been low, and companies have been crying out for good staff. The resources boom continues to shield Australia from some of the problems being experienced in other countries, but parts of our economy are starting to show signs of weakness in the face of higher interest rates and petrol prices.
One consequence of a slowing economy is that more people are likely to experience redundancy. Redundancy is a stressful event, but if it happens to you, there are ways in which its impact can be reduced.
Redundancy payments provide many people with a welcome lump sum and bona fide payments receive special tax treatment. This includes a tax-free component which is currently $7,350 plus a further $3,676 for each completed year of service. Anything in excess of the tax-free amount is treated as an “employment termination payment”. The first $140,000 of an employment termination payment is taxed at 15% if the recipient is over 55, or 30% if under 55. Any payment in excess of $140,000 is taxed at 45%.
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. 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. 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. 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. 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. Men, to a greater extent than women, often gain more than just an income from their work. In many cases it provides them with their identity and sense of worth. It may also be their main social network. In addition to support from their families, it’s important for anyone going through redundancy to seek any help they may need in dealing with the emotional upheaval that can occur at this time.
Stressful as redundancy is, it can be a great opportunity. Many people emerge from the redundancy experience with fresh motivation, happily embracing a new career.
