You can’t pick up a newspaper, listen to the radio or watch the evening news on TV without realising that, sadly, there are storms amassing with the prospects of mass redundancies for many employers both large and small as this annus horribilis that is 2020 unfolds.
Already we have seen many household names, and in particular retailers, impacted by the global lockdowns of the last 6 months as they either furlough staff or take the difficult decisions of making employees redundant.
The Office for Budget Responsibility is gloomily predicting that the UK jobless total could rise from 1.3 million to 3 million by the end of the year (that’s 12 percent of the working population), and with the phasing down of the Coronavirus Job Retention Scheme, some employers are going to find those storms very difficult to navigate as their costs rise.
Our recent experience with both our Corporate clients and our personal wealth management clients is that it is the younger generation (under 30) that have so far been impacted the most by this, but it’s becoming clear now that older workers (over 50) are also not immune from the job cuts either.
So if job cuts are on the horizon, what do employers and employees need to think about?
If you are an Employer - Reduce your employee uncertainty…
Communications: we find that uncertainty about the future is one of the biggest sources of workplace stress. To reduce the impact of stress it is important that employers provide as much information to their staff as possible.
Businesses should plan and implement a communication strategy to ensure clear and effective communication with their employees. They should avoid issuing mixed messages and the risk of inaccurate information circulating, as this can be damaging and might even derail the redundancy process.
Financial guidance or advice: money worries are also a major cause of stress, so businesses should consider offering staff access to financial advice or at the very least some guidance to ensure they understand the financial implications arising from their redundancy. Sadly, our experience suggests this is an area so many employers overlook.
Assistance: making services such as an employee assistance programme (EAP) available can provide much-needed practical and emotional support.
It is vital that line managers remember their own needs too. For whilst looking after the needs of their staff, managers can often forget that they too are likely to need some support to help them through the changes and challenges ahead.
Managers should research where they can get this support from, whether it be from colleagues, a mentor, or even outside the organisation such as Mental Health First Aid (MHFA), or their EAP provider if this is part of their employee benefits.
Consider a mid-life review: we also find that some employees look at redundancy as an opportunity to embrace a Mid Life Career review. These are proving increasingly popular in larger employers as they help people realise that the last 10 or 20 years of their working life can be the most productive, rewarding and fulfilling times of their working lives. These reviews allow flexibility, uptraining and reskilling to be incorporated so that the employee can retain and use their experience for new ventures and opportunities.
If you are an employee potentially impacted by redundancy...
Plan ahead: Easy to say but so difficult to do… you ideally need a financial emergency buffer to fall back on if you find yourself facing a period out of work.
We always suggest 3 to 6 months of household expenditure (note not 6 months of your usual total net monthly income as hopefully that will be higher). Many of my friends have found that their outgoings (and hence credit card bills) have reduced during lockdown and they have been able to save a bit more than usual for that holy grail of the rainy (or even stormy?) day savings account.
Budgeting is key to getting through any period out of work (and in work too!), and we can also help you with this type of planning. Simply making a list of all your monthly outgoings and expenditure to see where you could possibly save some money or cut back on excess spending is just something that so few of us do. However, it is clear that the last 6 months have genuinely changed this, with more people assessing their financial priorities, aspirations and even their Wills.
Think about the wider implications: the impact of redundancy can be far reaching with the loss of a variety of benefits, such as:-
Loss of death in service benefits and/or critical illness
Loss of employer pension contributions
Loss of any private medical insurance (for you and your family)
Loss of any ill health income protection
Loss of softer benefits such as cash plans or EAPs
A number of employers, including some of our clients, allow their employees who are affected by redundancy to invest their redundancy payment into the pension scheme; this can have its advantages but needs professional advice and guidance to ensure certain pension allowances are not breached.
Don’t get caught in a tax trap: some employees over age 55 look to draw on their accrued pensions to help support their income whilst they look for a new job, but this might have tax implications on how much they and any new employer can pay into a pension scheme if they start working again having drawn their benefits. Again advice is key to avoid any potential tax implications.
There is a wealth of information, support and guidance that we can help signpost as part of our client service when employees and employers are faced with the implications of redundancy.
If this is something your business is considering, we’d be happy to help you support your employees through the process in any of the ways mentioned above. To find out how we could help, get in touch.