The stresses of Covid 19 have been compounded by economic stress for both employers and employees. Inevitably, the economic downturn created in certain sectors has led to large scale restructuring of businesses and unfortunately, redundancy plans are now in play with many companies, both local businesses and multinationals.
Initial shock gives way to a need to make decisions.
The sense of shock brought on by the announcement of potential redundancies leads to a general feeling of insecurity in all workplaces. Even where voluntary redundancy options are presented by Employers, genuinely seeking to restructure the business in the hope of providing greater long-term stability for those remaining in employment, there is a sense of suspicion and foreboding.
Redundancy offers need careful consideration.
“Some Redundancy offers may be very positive opportunities for long serving staff who maybe want to change their career direction. Involuntary redundancy schemes may be more contentious and indeed stressful for both employers and employees”, says John Morrin of Claregalway based Financial Consultants, Q money.ie who recently launched a website www.redundancyadvice.ie offering advice to those experiencing redundancy decisions.
“There are so many decisions coming at once;
Should I accept the offer?
How much am I entitled to?
Has the redundancy calculation been properly calculated?
How will the payment effect my pension at retirement?
How much tax will be taken from my payment?
Employees are facing very significant life decisions and a number of key financial decisions all at once, when they are feeling quite vulnerable. Very often, the employer has placed a tight deadline for responses and employees feel very stressed.
The best advice is to “take a deep breath, set time aside, discuss it with partners, friends and family and employees should always seek professional advice on the technical and financial details of the redundancy offer” says Mr Morrin. Apart from the basic validity check on the redundancy offer that includes all minimum statutory entitlements (Generally 2 weeks per year of service, after the first 2 years of employment ) there is the decision on whether to opt for an enhanced tax exemption on the payment, which may look attractive at the time but could impact tax free payments form your occupational pension at retirement.
Get professional help
“Sometimes an employee looks just at the highest potential amount of money they can get on the redundancy cheque and that’s an understandable emotion- but quite often this can prevent the employee from getting their tax-free lump sum from their pension in retirement. It needs more careful analysis of the short- and long-term benefits, as well as the tax and pension implications”
With the economic impact of Covid likely to be with us for some time to come and the first wave of widespread redundancies in the West beginning to emerge in both multi national and local businesses, the message from Qmoney for now, is think carefully about your situation and get professional help with assessing the financial detail.
Qmoney Financial Consultants are available to businesses and Individuals as advocates and analysts of redundancy proposals. Contact [email protected], log on to www.redundancyadvice.ie or call their Claregalway office on 091-421900 for a consultation.
