Tips to help get you through retrenchment
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Bayport Blog

Surviving Retrenchment during the Pandemic

Published: June 24, 2020
Categories: financial literacy, Financial wellness
Tags: Affordability, Budgeting, Credit Health, Credit Score/Rating, Credit Wellness, Financial education, Financial Health, Financial Planning, Financial Tips, Managing your Money

During times of economic recession or crisis – such as the recent Covid-19 Pandemic – many consumers start to feel the pinch. The recent Pandemic has however put a great deal of pressure on the economy, and many companies are struggling to keep head above water during this time and sadly many have closed down completely.

For some organisations still trying to stay afloat, they are having to find ways to cut back costs and expenses to survive. This means that many companies have had no choice but to reduce their workforce, resulting in a larger than usual number of retrenchments across the globe.

How to manage your finances during a retrenchment

While retrenchments often catch many off guard, during the current Pandemic more and more people or starting to prepare for the possibility that this might impact them personally. Whether you have been informed that your household might be impacted by retrenchments or not; it is a good time to re-evaluate your financial situation in the event that you are touched by this unfortunate crisis.

Here are a few tips to assist you in preparing for, or managing, the impact of retrenchment on your financial wellness:

Restructure your personal budget 

While it is important to have a personal financial budget regardless; you might want to review it at this time and see where you might be able to cut back on any unnecessary expenses. Sit down with your family and talk about your financial situation to ensure that the entire household understands the need for a restructure and can perhaps contribute ideas on how and where to reduce expenses.

It is important that the whole family understands that money might be tight and that you may all need to manage without certain luxuries; and be more careful with over-consumption of food, water and electricity.

Consolidate your Debt 

Review your current debts such as personal loans and credit card debt; and consider a debt consolidation loan that combines all of your debts into one; often with a reduced monthly payment. It is better to deal with one primary credit provider during such a time; than have multiple debts with multiple lenders; hounding you for payment and placing you under more emotional stress.

Contact your creditors immediately 

If you do become retrenched, it is important that you contact your creditors immediately to inform them of your situation and discuss arrangements to make adjustments to your repayments as quickly as possible.

Check if you have retrenchment cover 

You might already have a credit life insurance policy or another policy that can help with taking care of your debt expenses while you are unemployed. Typically, retrenchment insurance policies will pay out for as long as six months after you have been retrenched. If you have not yet been retrenched; but are employed in an industry or company that is currently experiencing high job cuts, you might want to consider taking out a form of credit life protection or retrenchment cover to protect you in the unlikely event that you become affected.

Claim on your credit life insurance 

If you have taken out a long or short-term loan, odds are that you already have credit life insurance with the lender. Many people do not know that unsecured loans usually include credit life insurance to cover the value of the loan that you owe; should you die or become unemployed.  Be sure to check with your credit provider regarding the details of the cover to give you some breathing space as your significant repayments are covered for a brief timeframe.

Claim from your UIF

If you have been contributing towards the Unemployment Insurance Fund (UIF) during your employment – this will show up as a deduction on your payslip – then you are likely eligible to claim unemployment benefits should you become retrenched. Be sure to check your eligibility to claim unemployment should you become retrenched. The amount will not be equal to the income you were receiving; so it is important that you know how much you would qualify for, and work your ‘in case of retrenchment’ budget out to plan for the unlikely event that you are affected by job cuts.

Get what you are owed 

If you are affected by retrenchment, ensure that you are clear on the amounts that you will be paid; and when you are likely to receive these payments so that you are able to plan properly. Remember to consider all the expenses or benefits you receive and make sure that any expenses, overtime, commission or running costs agreed during employment, are paid out to you.

Depending on how long you have been employed, you are entitled to one week’s salary for every full completed year of service worked; in addition to your notice pay and any other severance agreed. Make sure that you are up to date on the legal obligations that your company has towards you; as well as those that you have with them with respect to termination.

Be careful to consider a voluntary retrenchment package as this would mean that you will not be able to claim Unemployment Insurance benefits. So it is in your best interest to work out where you are likely to receive a better income; either through an agreed severance package (if accepting a voluntary retrenchment) versus the benefits that you might be able to claim through UIF.

Remember to get everything in writing before you leave your employment.

Don’t take it personally

It is easy to take retrenchment personally. You are a loyal human who committed quite a bit of your time and energy to your job. The reality is that it is not your fault and you did not do anything wrong. Your company probably came to a point where they have had to settle on some tough financial decisions for its future existence. Retrenchment is the least favourable practice and last line of defense in business, yet often unavoidable. The sooner you deal with this, the sooner you can proceed onward to the new possibilities that await you.

Put your CV together

You might want to go home, curl up underneath a blanket, eat a tub of ice-cream, and cry; however, this is the time to be strong; step up, and take immediate action to prepare for the future. As quickly as possible, start working on updating your CV and submitting your application for new opportunities.

You most likely haven’t refreshed your CV since you were last searching for a job and have since gained more experience and learned new skills. You should also look at updating your Linkedin profile and consider whether it’s as impressive as it may be. Include articles you’ve written, courses you’ve taken, and whatever else you think could benefit you in your pursuit of employment. In addition to LinkedIn; which serves as a great platform to look for job opportunities; consider registering on other job sites in your area.

If you are struggling with debt management, would like to discuss credit life insurance on your personal loan; or which to take out a debt consolidation loan, then contact one of our representatives at Bayport; or visit our website for more information or to apply for a loan.

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