It’s week three of lock down in South Africa, and many small to medium size businesses are wondering how they will pay April’s salaries. Downsizing and retrenchments are on the rise and if you’ve been affected this way, here’s some advice to take to heart.
Stay calm, but act swiftly
If you are retrenched or fear that there is a chance your company will be retrenching staff, it is important to stay calm and keep a clear head. This will allow you to act swiftly, get advice, and make the right decisions for your future. While your first instinct may be to panic – and this is only natural – being panicked will only serve to cloud your thinking and raise the likelihood of knee-jerk decision-making at a time where careful, calculated decision-making is called for.
Be smart about your emergency funding
Your emergency funding was designed for times like these, but when and how you utilise your emergency money is critical to your short- to medium-term survival. Depending on where your emergency money is being held, you may want to begin the process of accessing this money. For instance, if your money is held in a money market fund on a unit trust platform, you may want to withdraw this money and keep it in a more accessible type of account.
Revise your budget
When it comes to budgeting, do not put your head in the sand. Now is the time to be ruthless and exacting with your budget. If Covid-19 has taught us anything it’s that we can slash our budget in times of crisis. Set aside your previous concept of what constitutes a necessity versus a luxury, and get ready to re-evaluate each and every line item. When cutting your expenses, it may help to remind yourself that this is a temporary austerity budget designed to get you through a tough period, and that it will not last forever.
Get legal advice and know your rights
The retrenchment procedure is clearly set out in the Labour Relations Act, and the Basic Conditions of Employment Act give clear guidance on what has to be included when calculated your severance package. Your employer has a responsibility to ensure that they have met all the necessary legal requirements during the retrenchment process, and that all benefits due are paid to you including your severance pay, leave, notice pay, pro rata share of any bonuses, commission, and retirement fund benefits. Your employer must also provide you with all the necessary forms and documents required so that you can register your UIF claim, including a Section 189 letter, certificate of service, and settlement agreement. Legally, you are entitled to one week’s pay for every year that you have been employed, but some employment contracts include retrenchment policies which provide for a greater level of severance pay, so check your employment contract carefully and get legal advice if necessary.
Register your UIF claim
Check your latest salary slip to ensure that you have been contributing to UIF and that your monthly contributions are correctly reflected. Provided your employer has issued a Section 189 letter, you will be able to claim your unemployment benefits for a period of up to 12 months. Be sure to do this as soon as possible by going to https://www.ufiling.co.za/uif/unemployment-benefits and logging your online claim. To find out more about this process and to download the required documents, visit www.labour.gov.za.
Protect your severance package and your retirement benefits
Guard your severance package and your retirement benefits fiercely. Between now and your secured source of income, it is likely that you will need to live off your emergency funding and your retrenchment package, so be intentional about developing a clear financial plan for your funds. Ideally, find an independent financial adviser who can guide you through the legal, tax and financial implications, and put a realistic plan in place. Having a clear financial road map will help settle your nerves and give you confidence as you chart your way forward. As a word of caution, be careful of investing your retrenchment package in a new business venture, especially if it is in an industry you have no experience in.
Don’t burn your bridges
Do not take your retrenchment personally. No employer wants to retrench their staff, and there is no doubt that your retrenchment was a tough decision for your employer to have made. The Coronavirus pandemic happened off the back of an already down-turned economy and the disastrous effects of continuous load shedding. As and when things do improve, ensure that you have worked hard to maintain good relationships with your previous employer, colleagues, clients and service providers.
Get references from colleagues and clients
Don’t be shy to ask for written references from your colleagues, clients and service providers which you can use to bolster your CV. Well-written references from respected individuals in your industry will help your CV stand out.
Protect your risk
With cashflow being tight, avoid the temptation of cancelling important risk cover such as medical aid, gap cover, or life and disability insurance. Check whether your employer’s group life provides you with a continuation option which will allow you to retain the group cover you have in place without having to be medically underwritten. Importantly, ensure that there is no break in membership when moving from your employer’s medical aid onto your own. If necessary, ask your financial adviser to do a thorough review of the life and disability cover you need and adjust where necessary.
Put your investment contributions on hold
If you are contributing to a discretionary investment, you may want to consider putting your investment contributions on hold for a while. Similarly, if you are contributing to a unit trust RA, remember that you can stop and start your contributions as you like without any penalties being charged. If cashflow is tight, rather put these contributions on hold – you can always restart them when you have a secure income.
Speak to your home loan provider
If you foresee that paying your bond instalments may be a problem, make contact with your bank immediately. Most banks have structures and mechanisms in place to deal with clients who are experiencing financial difficulty, and they will be able to assist you if you act proactively. Whether it’s restructuring your loan, allowing you a premium holiday, reducing your repayments for a limited period, or allowing for interest-only payments, banks are generally willing to assist financially distressed customers.
Contact your credit providers and check your credit life insurance
Your creditors are likely to be more sympathetic and accommodating if you contact them upfront rather than after your instalments have bounced, so be proactive about making contact with them. If you have taken out long- or short-term loans, check whether you have credit life insurance attached to these loans. Credit life insurance is designed to cover the value of your debt in the event of your death, or to cover your instalments if you are retrenched or unable to pay back your loan. If necessary, request a copy of your policy from your credit provider so that you fully understand how to claim. Importantly, bear in mind that some credit life insurance policies automatically lapse if your account falls into arrears, so being proactive is an imperative. Address the situation before your debit orders bounce.
Update your CV and LinkedIn profile
Take time to give your CV a complete overhaul, bearing in mind that there are plenty free online resources you can use to compile an eye-catching resumé. Be sure to include details of all courses, certificates, qualifications, achievements and projects that you have worked on. If you don’t already have one, set up a Linked In profile using a professional photograph of yourself and then set about asking for endorsements from your network. Linked In is also a great platform for job hunting, so embrace technology and use it to your advantage.
Enrol for free online courses and studies
Job-hunting can be soul destroying, and a series of rejections can knock your confidence. Enrolling for a fee online course can boost your confidence and your CV at the same time. The opportunities for online study are endless and are a great way to expand your skill set.
Develop a job-seeking or business plan
Approach job-hunting as you would any other project. Be strategic about where you send your CV, who you network with, and how you market yourself. Avoid simply emailing your CV out to a list of companies together with a generic covering letter. Do your research on the companies and organisations you are interested in and customise your application to specifically meet their criteria.