5 ways you can navigate redundancy

Estimated reading time
 5 min

In this article

• Your rights about redundancy
• The redundancy pay you might receive
• Your insurance policy and making claims
• Managing your finances with a few simple tips
• Thinking about the future

Losing your job, as awful as it might feel when it happens, doesn’t have to be a bad experience.

In fact, it can be the very thing that sets you up for success in the future . It can give you the opportunity to change careers, try something new, or even take a break to regroup and move onward with confidence.

That’s why we’re sharing five tips to help you navigate this new stage of your life. Let’s get started.

1. Know your rights

When it comes to redundancy, knowing your rights can help you understand how it will impact your future.

By definition, a genuine redundancy is when a business no longer needs your role to be done by anyone.^disclaimer For example, if a business downsizes and removes your role due to financial changes, then they might make your role redundant. Another reason you may be made redundant is if your workplace becomes insolvent or bankrupt.

2. Understand your payout

Your employer might need to pay you a redundancy payment, which is also known as a severance pay. The amount you’ll be paid will be based on how long you worked for the business, and some industries have clauses about redundancy pay in the National Employment Standards (NES).^disclaimer

Your redundancy payment will be subject to income tax.^disclaimer If you have any questions about the tax treatment of your payout, we recommend that you discuss with a registered tax agent or the ATO.

3. Check your insurance

You might be able to claim your lost income on insurance if you have a redundancy insurance or income protection policy. Check your insurance policy for any claims you can make so you can get financial support over a certain period, such as receiving monthly payments, as you adjust to this new stage of your life and figure out what your next steps will be.

4. Manage your financial commitments (and avoid the ostrich effect)

It might seem like the last thing on your mind, but staying on top of your financial commitments can help you rebound from redundancy stronger than ever. Here’s how:

• Manage your debt: You might not be able to pay everything off, having a plan to chip away at your debt and not let it fall behind can help you feel more comfortable with managing your finances while going through this phase. Also consider consolidating your debt under the one loan to make money management easier.
• Put a limit on your credit card: so you’re not overspending unnecessarily. And if you really don’t need it, then consider cancelling the card altogether.
• Update your budget and stick to it: This is one of the best things you can do to reorient, and stay on top of, your finances when your income situation changes. Need a hand with budget updates? Then you can use our budget planner to get started.
• Don’t stick your head in the sand and ignore the financial facts: The ostrich effect is our tendency to avoid negative information, but this can often make things worse in the long term. By acknowledging how your financial commitments have changed because of your redundancy, you can stay on top of them and avoid unwanted late fees.

5. Think about what you want

Being made redundant can give you the opportunity to think about what you really want. You might want to take a break to recharge your batteries and set new goals for the future. Or you might want to learn new skills at TAFE or university to broaden your horizons – the world is truly your oyster!

But whatever you decide to do, it’s important that you have a plan of attack and the finances to pay for it.

Read more about building financial resilience