Drum – 15 August 2019

http://www.drum.co.za 15 AUGUST 2019 | (^41)
YOUR
MONEY
SORTED
SURVIVING
RETRENCHMENT

I

T’S one of the most

stressful things that can

happen to you – losing

your job through no fault

of your own and sudden-

ly finding yourself adrift

in the troubled waters of

unemployment.

Retrenchment can also

be financially ruinous.

The salary you depend-

ed on at the end of every

month is suddenly not

there anymore and debts

and debit orders loom

over you like a big, dark

cloud.

But there are ways to

keep your head above

water until you find anoth-

er job.

labourguide.co.zaandlawyer.co.za

FindanaccreditedfinancialadviserattheFinancialPlanningInstituteofSouthernAfrica on fpi.co.za.

Forhelpwithtaxmattersgototaxtim.com.

The Commission for Conciliation, Mediation and Arbitration (CCMA): ccma.org.za

NEW MONTHLY

BUDGET

There’sno way of getting around
it: retrenchment will affect your
budgetandyouwillneedtoad-
justtothecurrentsituation.
Reviewyourexpensesandcut
anyextrasornon-essentials.
Try to use your severance pay
only for monthly necessities.
Calculate how long your sever-
ance will last if you use it only
to cover these expenses – this
willtellyouhowlongyouhave
tohopefullyfindanotherjob.
Don’t make hasty financial
decisions – get help from a fi-
nancial planner. Downgrade to
a cheaper medical aid option
instead of cancelling it alto-
gether and see if you can find
more affordable short-term
insurance cover. Don’t cancel
life insurance or other long-
term insurance plans. Rather
contact your insurer to see if
you can get a “payment holi-
day” – a temporary break
from paying your monthly
premiums, although you’ll
have to pay back the premi-
ums at a later stage. Find out
the requirements and terms.

1

CHECK YOUR

DUES

Thelawstipulates certain mini-

mumamountstobepaidtoyou

uponretrenchment.

A standard severance package

is a minimum payment of one

week’s salary a year worked for

a company. For example, if you

worked for a company for four

years, you must be paid the

equivalentofatleastfour

weeks’salary.

You must be compensated for

leave not taken and pro-rata

bonuses (such as if an annual

bonus was part of your em-

ployment contract), or any

othermoneysuchasoutstand-

ingcommissionorovertime.

If you were a member of the

company retirement fund, that

money must also be paid out to

youaccordingtothefund

rules.

Once notice of retrenchment

has been issued, there’s usually

a minimum period the employ-

eemustkeepworkingforand

theymustbepaidforit.

Since 2014 the first R500 000

of your severance pay is tax-

free, according to the law. To

2 qualify for this tax conces-

sion, your employer must pay

you a lump sum and stipulate

it’s because you’re being re-

trenched.

Payments for untaken

leave and pro-rata bonuses

aren’t included and are taxed

normally. To find out more go

to sars.gov.za.

GUARD YOUR

PENSION

Itmaybe tempting to dip into

your retirement money but

experts warn this is seldom a

good plan.

You can be taxed on this

money and might never save

enough again for when you

retire.

It’s better to transfer the

money to a preservation fund

• this money can’t be taxed.
  Talk to your human resour-
  ces (HR) department, the pen-
  sion fund’s administrators or
  a financial planner who can
  advise you on your retirement
  money.

3

NOTIFY YOUR

CREDITORS

Ifyouhave debt such as a per-

sonal loan, chances are you have

credit life insurance. This is insur-

ance that specifically covers debt

repayments if your circumstanc-

es change, including retrench-

ment. These policies usually cov-

er your debt repayments for a set

period if you’re retrenched – usu-

ally six to 12 months.

If you don’t have credit life in-

surance, ask if you can renegoti-

ate the terms of your loan. Credi-

tors can restructure your loan so

your monthly repayments are

smaller, but this will cost you in

the long run as you’ll be repaying

the loan for longer.

If you’re worried about your

debts, speak to a debt councillor

(find one at ncr.org.za) who can

do a free assessment and make

recommendations.

4

CLAIM FROM

THE UIF

Ifyoucontributed to the Unem-

ployment Insurance Fund (UIF),

as is standard for South African

labourcontracts,youcanclaim

fromthisfund.

You need to apply for UIF ben-

efits within 12 months of being

retrenched. The benefits

should pay out for up to one

year, depending on how long

you’ve been contributing, or

until you find a new job. For

more information on claiming

gotothelabourdepartment’s

website(labour.gov.za).

The UIF might require you to

go for training or career coun-

selling, and you must have

proof you’re job-hunting.

5

GET HELP HERE

Tips on how to get through this life-changing time

BY LETITIA WATSON ADVICE