She's On The Money - Navigating Redundancy

Episode Date: March 19, 2024

It can certainly be a shock if you find yourself being made redundant, however it is all too common and nothing to be ashamed of! Often redundancy can provide you with some flexibility and put you in the position to level up in your career. Today we talk you through the ins and outs of redundancy, how packages can work, what to discuss with your boss, navigating conversations with your next employer and so much more! Acknowledgement of Country By Natarsha Bamblett aka Queen Acknowledgements. The advice shared on She's On The Money is general in nature and does not consider your individual circumstances. She's On The Money exists purely for educational purposes and should not be relied upon to make an investment or financial decision. If you do choose to buy a financial product, read the PDS, TMD and obtain appropriate financial advice tailored towards your needs.  Victoria Devine and She's On The Money are authorised representatives of Money Sherpa PTY LTD ABN - 321649 27708,  AFSL - 451289.See omnystudio.com/listener for privacy information.

Hello, my name is Natasha Nabanunga-Bamblett. I'm a proud Yorta Yorta, Kurni, Wolperi and Awadjuri woman. And before we get started on She's on the Money podcast, I would like to acknowledge the traditional custodians of the land of which this podcast is recorded on Awadjuri country, acknowledging the elders, the ancestors and the next generation coming through. As this podcast is about connecting, empowering, knowledge sharing and the storytelling of you to make a difference for today and lasting impact for tomorrow. Let's get into it. She's on the money.

She's on the money. Hello and welcome to She's on the Money, the podcast for people who want financial freedom. My name is Bec Syed and with me is Victoria Devine. What a surprise. How are you? Good week? Yeah, a really good week. Very nice.

For no particular reason. Okay, so V, this week's episode. Yes. This word I feel like brings some anxiety with it. It does. We're talking about redundancy. We are. Everyone would have known that because of the topic of the episode though.

It's not a surprise. That's true. on it and they probably had anxiety clicking on it. And I really appreciate that you got this far. What made us think about it was, well, going through my contract and I noticed when signing my contract, there was like a whole section about redundancy. Not my contract with you though. Not our contract. Because you won't sign a real contract with me. You'll keep working for ARN, which mad respect, but you know, just making it clear. Absolutely. There is a section in all my employment contracts on redundancy though.

There has to be. Let's start there. What is redundancy? So redundancy is something that occurs when an employer no longer requires that job. It's not personal or it shouldn't be personal. But for example, you say work at your workplace and they do a restructure and say you work in the growth department, but in the restructure, there's actually not going to be a growth department. We've identified that we don't actually need that as part of the business or we're trying to cut back costs and like, you know, stripping away roles. The company as a whole has deemed this not necessary. What happens is your role then becomes redundant because it's not needed by the company anymore. It's not personal.

Right. So would that be the same as getting fired, basically? No. I mean, it can feel that way. I totally understand it. No one wants to be made redundant. You know what? Actually, that's a lie. There are some people who are like, I've worked at this company for ages and my redundancy package would be lit. So they do want to be made redundant, but that's a story for another day. But whilst getting fired and being made redundant both end up and you having no job, Bec. They're very, very different. So when you get made redundant, there's actually a notice period that you might have to work through. But we're going to touch on this a little bit later on. And you're often left with what is called a redundancy package,

which is very nice. Sounds lovely. But when you're fired, this is quite often an instant dismissal and like you wrap up your work immediately and you don't actually receive a payout except for obviously the things that you're owed, like annual leave and stuff that you've accrued. So it is very different and treated and handled differently. So it kind of sounds like if you were to lose your job, redundancy sounds like a pretty good thing. Like if I'm going to lose a job, Bec, I want to be made redundant. I don't want to get fired. Yes.

For some, it definitely is better. A redundancy package is obviously different for everyone depending on how long they've actually been with that employer. Like if you've stayed with a company for over 12 months, you could be eligible for redundancy pay. but this will obviously be stated in your contract as you noticed when you were reading yours. So for example, if you've stayed with a company, Bec, for two years, you might actually receive between four and six weeks worth of pay in lieu of you working out your notice period. Often, if an employer has made you redundant, they would actually prefer you to wrap up immediately because there's nothing to wrap up. Also, it's a bit awkward, isn't it?

It's a little bit awkward, but also wrap up because we've deemed this job useless, basically. We don't need it anymore. So like why do it for another four to six weeks? That doesn't make a lot of sense. And you essentially then don't work through your notice. You just go home and still get paid. There are many redundancy calculators online that might actually help you to understand what you could receive. So if you're thinking about like, fire out, I'm going to be made redundant, start looking up a redundancy calculator. But if you're in a job and you've been in that job for nine, 10 years, you could actually be looking at 16 whole weeks of payback. That sounds pretty sweet.

16 weeks of pay. All right. I'll spend some of that time finding a new job. No worries. But I'm also thinking like you do have to pay tax on that. I see. You do. But yes and no.

So it's not like the tax that you're paying on your current package right now, Bec. Okay. So there is actually a tax-free limit because you're being made redundant and obviously it's not you're being fired like the government does look after us in this way. So, the redundancy payout is actually designed to provide you with income while you're looking for a new role. However, there is a limit on what is tax-free. So, the base payout limit is $11,985 and an additional $5,994 for every year of service. So, say you work for a company for three years, the most you can get in redundancy tax-free is $29,967, which is actually quite a

lot of money, if you ask me. Yeah. Okay. So that's minimum tax free. I thought you were going to say max you can get paid out. And I was going to be like, wow, that doesn't sound as good as I thought. It's a pretty good number. And that's why I guess when people go, oh, redundancy package, if you've never been through it, like there's no reason why you would understand how the tax on that works. But the tax is very favorable to make sure that you're in a financially secure position and have enough time and money to find a new job. Because again, you're not being fired. The role has been made redundant, that doesn't make you a bad employee. Totally. It kind of makes me think though, like if you're a small business and you can't afford one to keep paying someone for a job

that's redundant, but you also can't afford the payout, how would they go about affording that? Well, any good employer should have a very good budget and cash flow system and have it planned out in case these things happen. I see. Because that would be the right thing to do, but it really depends on how small the business is. So in Australia, there is actually a small business exemption, which is important to understand because it can be good and bad. Like working for a small business is great, but there are a few risks that you take on when you choose to do that. But it means that a business with under 15 staff generally avoid the redundancy payout requirements. So it doesn't matter how long you've worked for them if they're a small business. And it's kind

of like a bit like murky waters, I'd say, because unfair dismissal might come into play if there's not a valid reason for the redundancy. It's not like a blanket get out of jail free card for the small business. So like if you worked for a small business as like a video editor and they had less than 15 employees and they're like, look, Becky, you made redundant. Sorry, like we're a small business. Don't need to pay you out. You go, yeah, great. And then you see them advertising the same role a month later on Seek. Yeah, cool. Straight to VCAT. Like we're reporting that. That's illegal. legal. That's good to know. Okay. So what sort of industries are you likely to get made redundant from? Okay. So like there's no industry that's actually safe from redundancy, but there are some

when I did some research that are a little bit more common than others. For example, the average quarterly redundancy for the construction industry is 11,900 people and retail is 8,200 people where on the lower end is like education and training and that is 2,700 people. I feel very scared all of a sudden. I wouldn't feel scared in your job. They need you. Do you think so?

Yeah, like they are very reliant on you, like desperado. That actually is music to my ears. Stick around because after the break we will be looking at how to use your redundancy to your advantage in conversations you should be having at job interviews about redundancy. Smart. Okay, V, we are back and we've talked about what redundancy is and how it works,

but how do we use it to our advantage? All right. So redundancy can be super hard and I don't want to take away from that because it can be really, really emotional. My partner's been made redundant and the emotional rollercoaster you go through because one, you're like, okay, all right, that's fine. He can find another job. Oh, how exciting. He's going to get a payout. Oh, far out. Like what if there's not another job that he likes? Like it's an emotional period of time. And while the money side of things can be like a little bit sexy, like I'd prefer you just have a stable job. Yeah. I actually don't want to change jobs right now. Like he wasn't looking for a new job, but redundancy can actually set you up with some flexibility if the stars align.

And by that, I mean what you can do when you get made redundant to then set yourself up. So my friend, let me give you an example. Are you ready? If you were with an employer for two years and you received eight weeks pay and one month's notice, your employer, they might make you work the month or they might just like let you wrap up immediately, depending everywhere is different. In either case, this is going to be eight weeks lead time for you to find yourself a new role, right? Redundancy, it's not like termination and it actually doesn't look bad on your resume at all. So like someone who is interviewing you is not going to go, oh, Bec, you got my redundant. No, like I'm going to go, oh, great. Bec probably didn't want to leave that job. Maybe she's like

a very valuable asset, I probably do want to interview her and look into her. So if I was to get made redundant today, I would actually be applying for jobs from day one. I wouldn't be waiting. I would be calling up recruiters. I would be reaching out to my network because if you're wrapped up immediately and you landed a job starting in two weeks, you're practically getting six weeks worth of free payback. Ah, that's so true. That's a money win that can go into your emergency fund. And because some of it would have been tax free, it's a little bit more than what you're going to expect it to be. So the quicker that you act, the more advantage you might be giving yourself. And it's kind of like getting an end of employment bonus if you time getting

a new job correctly. You could also use this as like a fresh start. Maybe you've really wanted to try out like a different industry. This is your push, my friend. This is your opportunity to kind of like dabble in a new career. Let's reframe it, make it exciting. That does sound kind of exciting. So we've covered a lot today, but what about negotiating a redundancy package? Is that something you actually like can do? And if so, how do you go about it? Negotiate everything. Negotiating a redundancy package is actually possible. It's essential to cover factors like length of service, your role and any additional benefits. But say you have access to a company car, like and currently you have a work phone,

you could potentially negotiate benefits to negate the loss of those. So one, make sure you read your contracts, but like it doesn't hurt to ask, does it? Totally. Keep the car maybe. Yeah, keep the car like if you can but more likely be able to keep the phone be like oh hey like i don't have a phone is there any way we can just work that into the contract so that when you sign the dotted line you don't have to give the iphone back it's not a bad idea money win you know when you're doing references and stuff like that can you like use the people that made you redundant as a reference absolutely you can it depends on maybe a relationship with them well i mean yeah you're not going to use someone that you have a dodgy relationship with for a reference to begin with

You probably weren't going to go and apply for a new job and then quit and still use that person, right? But you could do even better. Some workplaces actually have job search assistance. So you might get made redundant and then the HR department actually might step in and assist you in the right direction in like resume writing and support, or they might have insights to career opportunities outside of your current company that you didn't know about. So these could be a good push in the right direction.

but yes you can absolutely use your current employer who's just made you redundant as a reference like they didn't fire you they've made you redundant and so the conversation would be like oh my gosh we are so sad to be losing Beck it wasn't about Beck it was about the role like we just don't need that role performed anymore should be an absolute asset to your company and often you can go all right well I'm being made redundant can I just get like a letter of recommendation that I can pop with my resume. So like, it's just so clean and so easy to begin with. And that's another option as well. Yeah. It might even be better than getting fired or quitting. Oh, a hundred percent. No, everything when it comes to redundancy is better than

getting fired. Like having that on your resume is not ideal. But the relationships, even if you're quitting, it's kind of like, well, they owe you something now. Yeah. Yeah. Actually, we won't frame it that way, but like, yeah, you're right. Because it's kind of like, hey, you did this to me. I didn't try and leave you. I was loyal. I was so loyal. Now go tell people that I'm really good. So what should I be asking my job interview when it comes to redundancy? Okay. So it's probably not a question that's going to come up very often. It's definitely not the first question you want to ask, but when it gets down to like the nitty gritty, you're going to want to make sure that they actually have good policies in place and you'll find these in your employment

contract but I'd be asking what their employment retention looks like so I knew how secure the job would be in the future like I'd be asking what actually is the policy when it comes to redundancy and you know how that looks if you're worried it's not something that needs to come up in a job interview though like I don't want you going oh well I'll ask them about redundancy they'll be like why do you want a redundancy package you haven't even started here yet but I'd be asking what that policy is what it looks like and I'd also be asking what opportunities for growth currently exist in the company that you're joining because they might have another option down the line to move into a new role when your role doesn't exist. So that's called redeployment

where you would be made redundant from one role and then just rehired in another area of the business, which would also be a slay if you like the business. Okay. It doesn't seem so scary to me anymore, but I guess like we're talking more financially, but there's like the whole emotional side to it as well 100% feels like trash let's be honest like no one's gonna go yay jump for joy got made redundant I mean when Steve got made redundant we weren't upset we were like oh good that helps us financially significantly this is probably too much information I kind of don't mind but because he worked for that employer for nine years back so we were like oh this is not the worst thing to happen is that but he did pay out yeah but he did like the company and like they

had, you know, really good policies and he's like, oh, I could go back at some point. Like when you get made redundant, it's not like no forever. Like you could definitely like apply for another job in that company if you love them so much and still want to continue working for them. Like it's not them slamming the door in your face and be like, can't believe we finally got rid of Bec. Like it's not like that at all. It can seem really scary, but I think taking it in your stride and taking a redundancy by the horns and going, all right, I know this is overwhelming, but let's get back on track as soon as possible. How quickly can I land a new role? Because you might end up with six weeks worth of pay in an emergency fund and

a brand new role that you love and a team that you thrive in. And you're in such a better position. Like, let's reframe it and go, well, what can I get out of this? Like, you know, you might have been thinking about how you're like, I love my job. I really do. I'm pretty underpaid, but like, I still love my job. Now you're going to get equal pay. Like, isn't that really exciting? I think it is. I feel like emotionally, yeah, it's a massive challenge and it definitely is a bit of a shock to the system. But I think you're allowed to have a range of emotions at this time. Your whole world has literally been flipped upside down and humans inherently do not like change, Bec. Like unless they've instigated that change and felt really in control of it, like we're not

that excited to have our job not exist one day. Yeah. You know, like it's not going to work and you should genuinely be seeking out some support as well. Like it's hard from friends or family your employer might have you know professional counseling that you can use during that process they definitely should be letting you know what your options are it's all about understanding that you know it's not a reflection of your worth it's not a reflection of your work ethic it's not a reflection of how good you were as an employee it's actually just is what it is and it's about starting a new chapter yeah true that's a really good perspective actually thank you it's mine incredible that brain of yours honestly it's all i've got now though beck do you have any advice

for our community who might be facing redundancy or are in the process of job hunting after being made redundant? I feel like what I said before, it's not reflective of your worth. Like I think so many times we tie our professional success to our personal worth. And like, to me, that's the dumbest thing in the entire world. Like I don't care if you're a doctor or a lawyer or you're the admin assistant or, you know, you clean the wheels on a train. Like I could not care less if you're a good and kind human. I care so much more about you than what your career like stipulates you are right? I just don't care. It's not how I pick friends. It's not how you should pick friends. Like we keep company that is kind, right? So you need to know first that it's not a reflection of

your worth in any way, shape or form. But once you've realized that and you've gotten through the shock of it, I would want you to be really proactive and use your current job as an opportunity. Use the time during that notice period or immediately after to upskill and network and explore new job opportunities. And remember, it's not just an end, but a potential beginning of something even better wow beautiful is that a good place to leave it absolutely i think so full of it sometimes but i think i did good this time there i feel really motivated all right let's leave it before i muck it up thank you so much we will see you guys bright and early on friday for a little catch-up of the week but till then have the best week and we love you very

much bye guys the advice shared on she's on the money is general in nature and does not consider your individual circumstances she's on the money exists purely for educational purposes and should not be relied upon to make an investment or financial decision if you do choose to buy a financial product read the pds tmd and obtain appropriate financial advice tailored towards your needs. Victoria Devine and She's On The Money are authorised representatives of Money Sherpa PTY LTD ABN 321 649 27708 AFSL 451 289.