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Knowing How to Deal with Retrenchment Due to COVID-19

How to deal with retrenchment may be a question you have thought you would never have to ask yourself.

However, as COVID-19 leaves a trail of destruction on the global and, more importantly, the local economy, many employees are staring into the unforgiving eyes of sudden retrenchment.

how to deal with retrenchment

Retrenchment Due to COVID-19

COVID-19 has caused an unprecedented change in the way we conduct our personal and business lives. However, it can be seen as a blessing in disguise as it gives us the chance to reassess our priorities against how quickly things can change and how important it is to be prepared.

Although retrenchment can be a shocking and unwanted life event, if you have a sound financial plan in place and your personal finances are in order, there will be little need for stress.

However, as human nature dictates, a certain level of panic may set in once you hear that retrenchment may be on the cards for you.

For this reason, our financial advisors in Johannesburg have put together a checklist on how to deal with retrenchment that can help you stay calm amidst this storm of uncertainty.

Checklist on How to Deal with Retrenchment

Move Swiftly but Don’t Panic

Panic creates clouded judgement. Although it’s important to start preparing for retrenchment by getting all your affairs in order, it’s imperative that you stay calm throughout the process.

Careful, calculated decisions are what will get you through this rocky territory safely. Our financial advisors are experienced and equipped with the tools and knowledge to help you make sound decisions about your finances. There is no reason to navigate retrenchment, or the possibility of it alone.

Communicate

Support from loved ones can help you through the most challenging times. It’s of utmost importance that you have a conversation with your family about the possibility of retrenchment and what impact it may have on the household.

Emergency Funds for Emergencies

Yes, your emergency funds are there for your short- to medium-term survival in these events. However, how you make use of these funds will determine how long they will last.

The first step is to start the process of making these funds more accessible, so that if or when your retrenchment is finalised, you have direct access to your capital.

Always remember that these funds are there to help you cover your essential living expenses so, be smart about what you use them for.

Revise Your Budget

If it’s one thing that COVID-19 has taught us it’s that how we spend our money will determine how resilient we are in difficult times.

This is an excellent opportunity to take another look at your budget with a special focus on “non-essential” spending.

With non-essential services and business being closed for over a month, we realise that these goods and services are not vital to our survival but rather luxuries that we simply don’t need.

How much money are you spending on entertainment, clothes and online purchases? This is a good time to practice how to live without anything that isn’t a necessity.

Furthermore, until your retrenchment is finalised, you have the opportunity to save all that money instead of spending it.

Prepare to Claim UIF

If you have been contributing to the Unemployment Insurance Fund and your employer has issued a Section 189 letter, you can claim from the UIF for a period of 12 months after your retrenchment.

This can be a useful buffer to get you through the months of unemployment until you find employment again, so start preparing the documentation needed to apply.

Protect Your Package

Your severance package and emergency funds can help you get through the months of unemployment.

However, you cannot be sure about when you will be employed again so it’s imperative that you protect your retrenchment package with all your might.

Having a clear financial plan for this period can help you through the tough times of no income. Peace of mind has no price tag and our financial planners can help you achieve it.

Risk Cover is Essential

Cashflow has suddenly become tight and the urge to cut costs wherever possible may be hard to fight.

However, your risk cover should be one of the last things on your list of cost-cutting. Life insurance, medical aid, gap cover and disability insurance are as important now as they were before.

You may even want to check with your credit providers if you have credit life insurance in place. All of these can contribute massively to your peace of mind.

Update Your CV and Online Profiles

Now is a good time to update your CV to include your latest employment history as well as any skills that you developed while being employed.

It may seem hard to believe, but thanks to COVID-19, there may be many job opportunities arising out of newly structured business models.

It’s also a good idea to update your online profiles and improve your presence; LinkedIn is an excellent platform for job seekers and employers to network with each other. This is your chance to take advantage of potential opportunities.

Reassess Your Skills

Take a look at your current skills and write them down, even the ones you may think are insignificant.

Then, do some research on which of these skills have become or, may become more essential during these times where only essential goods and services are permitted. Find ways to upskill in these departments and adapt your existing skills to current economic needs.

If necessary, look for new skills that you can develop that can help you generate an income both during and beyond the COVID-19 pandemic.

This is an opportunity to get creative and find innovative ways to depend less on employers to earn your income wherever possible.

Olemera Financial Advisors Johannesburg – How to Deal with Retrenchment

The unfortunate reality is that retrenchment can happen to anyone at any time. The important thing to remember is to not take it personally. COVID-19 has debilitated many business owners and employers, leaving them no choice but to cut costs.

Knowing how to deal with retrenchment and how to prepare for it financially can greatly minimise the level of stress you experience if or when it happens.

By having a sound financial plan in place will ensure that you can navigate sudden unemployment with peace of mind.

For more information on how our financial advisors can help you prepare for an uncertain future, please contact us.

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