How to Deal with Being Made Redundant

Being made redundant is always a negative, but there are some positive steps you can take to help you keep your financial footing.

Whether you see it coming, or it’s a complete surprise, getting made redundant is a real kick in the teeth. Not only does it impact self-confidence, it can take a huge toll on personal finances.

Thankfully, though, there is help out there if you’re made redundant. Over recent decades, the idea of a job-for-life has evaporated. According to government statistics, only 38% of employees have been in the same job for over five years. As a consequence, many of us have experienced unemployment and can empathise with those who have lost their jobs.

In addition to emotional support from family and friends, there’s also help from the government, banks and lenders. If you remain proactive, there are plenty of positive actions you can take to help you get your finances back on track:

Check your final payslip

Check your last payslip to make sure that you’ve been paid correctly. Also check that you’ve received remuneration for any holidays or days in lieu that were outstanding. If you’ve been in your job for under a year, your employer only has to pay your outstanding leave at 8% of your normal pay rate.

If you’ve been employed for over a year, then your unused annual leave is stuck on the end of your period of employment, which can have extra benefits. To cite the example given on the government’s website:

“If your last day is 18 December and you’re paid out for 6 days of unused leave, your last day is actually 30 December — so you’ll also be paid for Christmas Day and Boxing Day as long as you’ve been in the job for at least 12 months.”

Unlike some overseas countries, New Zealand doesn’t have any law covering redundancy pay. Your entitlements will be listed on your job contract, so dig it out and check to see that you’ve been paid what you were owed.

Financial Worry

Create a budget

Regardless of whether or not you receive a lump-sum payout when you’re made redundant, make a budget. Without a detailed plan of what you have coming in (if anything) and your outgoings (living expenses), it will be impossible to keep your finances in check.

At Canstar, we’ve a number of stories and calculators to help you create a budget, including:

Once you’ve got your head around the figures coming in and going out of your bank accounts, you can take steps to maximise the money you do have …

Research financial help

While social welfare is there to provide a safety net for those facing financial hardship, the relief available varies, depending on an individual’s financial position. Essentially, it’s there to ensure people have a roof over their heads and food on the table in times of severe economic stress.

Work and Income has a detailed website with online checklists that can give you an insight into what you are eligible to claim. Even if you’ve got some savings or have substantial assets in the form of the equity in your home, it’s still worthwhile exploring all your options, as any financial help is better than none at all.

On top of government assistance, it’s also worth considering a KiwiSaver Hardship Withdrawal. Yes, it’s a big decision to make, and one that will have financial ramifications during retirement, but if it can help prevent an immediate crisis it’s worth considering.

Aside from government assistance, there’s also plenty of help out there from private lenders, too. Since the government announced its mortgage holiday scheme at the end of March, tens of thousands of homeowners have contacted their banks about the options available. As with withdrawing KiwiSaver funds, it does have cost ramifications, as covered in our story The True Cost of Taking a Mortgage Holiday, but if needs must, then needs must.

Deal with debt

If you’ve a number of debts, and you can foresee difficulty meeting repayments, don’t ignore them. They’re not going away! Tackle them early by prioritising your debts to minimise any possible interest payments and/or penalties.

If you’ve a joint credit card and your partner is still in employment, consider switching your card to one with lower fees or interest. Or swap to one with an introductory interest-free period. Our story Seven Steps To Help You Get Out Of Debt has more details, or click on the button below to compare low-interest cards and to access our latest credit card awards.

Compare credit cards for free with Canstar!

Keep proactive

Yes, it’s easier said than done, but when faced with losing a job, it’s essential to remain proactive. While we have little or no control over being made redundant, we all have control over the subsequent choices we make. The right financial decisions, however hard they are to make, can have a huge difference on our long-term wellbeing, and be the first steps on the path to re-employment.

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