7 steps to navigating redundancy

September 12th 2024 | Categories: Advice Space | | Tags: redundancy |

Here one day, gone the next.

Whether it’s due to restructuring, a merger, or economic circumstances, navigating an unexpected career transition can be overwhelming. Redundancy can shake your financial security and peace of mind, but it’s important to remember it’s not about you—it’s about the business.

According to the Fair Work Ombudsman, the most common reasons for redundancies in Australia include a slowdown in production, company closure, technological advancements, mergers or takeovers, and business relocations. Knowing that your redundancy isn’t personal can help shift your perspective and focus on making the most of this opportunity.

1. Understand Your Entitlements

In Australia, redundancy entitlements are governed by the Fair Work Act. Typically, these include:

• A lump-sum payment based on your length of service
• Payout for unused leave
• Notice pay, if applicable

Review your employment contract and ensure you’re receiving the correct payout. If you believe you’re entitled to more or have concerns about the process, consider seeking advice from an employment law expert to clarify your rights.

2. Review Your Financial Situation

Once your payout is confirmed, take the time to reassess your financial landscape. Consider:

• Savings: Do you have enough for emergencies?
• Expenses: Are there any areas where you can reduce costs?
• Debts: Prioritise paying off high-interest debts like credit cards or personal loans.

Creating a realistic budget will help you manage your funds effectively during this transitional period and prevent unnecessary financial strain.

3. Seek professional financial advice

Redundancy often comes with a substantial payout, making it a pivotal time for smart financial planning. Consulting with a financial adviser will help you make informed decisions on:

• Investment of your payout: Superannuation contributions, managed funds, or term deposits could be viable options.
• Tax implications: Redundancy payments can have significant tax implications. A professional will ensure you minimise tax liabilities and make the most of any available concessions.
• Retirement planning: If you’re nearing retirement, now might be the perfect time to reassess your strategy and adjust your plans accordingly.

4. Evaluate your career options

If you were beginning to feel the effects of burn out or unfulfillment in your previous role, redundancy can offer the space and time to reflect on your career goals. Ask yourself:

• Is this an opportunity to switch industries or pursue further education?
• Should you start your own business?
• Are there new roles within your current industry that better suit your skills?

Take advantage of job search platforms, networking events, and career coaches to guide you through this transition. Many employers also provide outplacement services to support you in your next steps.

5. Manage your mental health

A job break-up can often feel like a relationship break-up. Facing redundancy can take an emotional toll, so it’s important to address your mental health during this period. Talking with friends, family, or a counsellor can offer much-needed support. Many companies offer Employee Assistance Programs (EAPs) that provide free counselling services, which can help you manage stress and stay mentally resilient.

6. Access government assistance

If securing a new job takes time, explore government support options. Centrelink provides financial assistance and job-seeker support to unemployed Australians. You may also be eligible for retraining and upskilling programs to help pivot your career or improve your employment prospects.

7. Revisit your insurance policies

With a change in employment, your insurance needs may shift. Take time to review:

• Income protection insurance: Check whether your policy provides redundancy coverage.
• Life and Total Permanent Disability (TPD) insurance: If your insurance was tied to your employer’s superannuation plan, ensure your new arrangements cover your needs.

Embrace New Opportunities

When one door closes, another opens. Redundancy doesn’t have to signal the end of your career; it can be the start of a new chapter; one that begins with a solid financial cushion and the opportunity to pursue new paths.

For personalised advice, consider partnering with one of our trusted financial advisers. They can guide you through the complexities of redundancy, empowering you to make confident decisions and achieve your financial goals.

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What you need to know: This information is provided by Invest Blue Pty Ltd (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regards to those matters and seek personal financial, tax and/or legal advice prior to acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you.