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What to do if you’ve been made redundant

Being made redundant can be a huge shock, both emotionally and financially. Here are some ideas that could help you manage it.

3 minute read

If you’ve been made redundant it’s important to know there are ways to help deal with the immediate financial impacts. Here are a few to consider.

Check your employment contract for redundancy payment entitlement

Check whether your contract includes a redundancy payment and, if it does, what you might get. If you’re not clear what it entitles you to, ask the HR (human resources) person if your workplace has one – or talk to your manager. If it’s still not clear, consider advice from an employment lawyer.

Review your personal budget and minimise expenses

It’s always a good idea to have a clear understanding of your personal finances - what money your household has coming in, and the expenses going out.

Start with the minimum amount you need for essentials like rent or home loan repayments, food, transport, insurance, rates, power, phone, and internet. This is important to know if you talk to your bank or support services.

Then look at non-essential expenses, such as gym memberships and online subscriptions, and think about putting these on hold (or cancelling them). Look at other areas to cut back, such as moving to cheaper providers or price plans. All of this will give you a clearer idea of your overall expenses – and how much you’ll need to meet your costs.

Next, to see if you need additional financial support (and if you do, how much), work out how many of your expenses can be covered by any savings you have, any other income – or redundancy pay.

Work out how much money you owe

If you have any debts, write down all your repayments. If you don't have enough to make the regular repayments, it's a good idea to contact the lenders as soon as possible. If you're a BNZ customer and having difficulty managing your personal lending repayments (e.g. home loan, overdraft, personal loan, or credit card), you may be able to apply for financial hardship support.

You could consider refinancing or consolidating any higher interest debt you may have (e.g. credit cards, personal loans, or overdrafts), onto a lending product with a lower interest rate and potentially over a longer term which could reduce your payments. Some of these options could result in you paying more interest over the term of the loan, so you'd need to think carefully about your options - a financial mentor can help. Or, think about using your redundancy money to pay off that debt, and reduce your repayments.

If you have lost your job or are unable to work due to sickness or injury and you have income protection insurance or payment protection insurance, you may be able to make a claim.

Look into financial support options

Whether you’ve lost your job, or your income’s been substantially reduced, there is help available – and there may be a few different options, depending on your situation. Check the Ministry of Social Development website.

Alternatively, talk to Work and Income (WINZ). They can provide information about whether you are eligible for income support entitlements. For example, the Working for Families package offers tax credits, an accommodation supplement, and a childcare subsidy for up to 50 hours a week when you’re working or studying.

WINZ provides grants too, including Transition to Work Grants, which can cover some of the costs of job hunting, such as clothes, travel, and living expenses – until your first pay. You don’t necessarily have to be on a WINZ benefit to apply for some of these grants.

Talk to your bank

Talk to your bank early on about your options, and how they could help. If you're having trouble managing repayments, you may be able to apply for a variation to your loan on the basis of financial hardship. This is a change to your loan conditions, which may include extending the term of your loan and/or a payment deferral period (a period during which you don't need to make any payments, but interest will continue to accrue and be added to your loan). Find out how to apply for hardship support through BNZ.

Look into tax breaks

Redundancy lump sum payments can push you into a higher tax bracket. Talk to the Inland Revenue Department about applying for a tax credit. They can also support you if you need help with any tax you owe.

See what other support you can access

There are many free budget advisory services listed on the government’s website, as well as Sorted, and MoneyTalks.

MoneyTalks is an independent and confidential service which is completely free. The financial mentors can help you with confidential advice, and talk you through your options for getting on top of debts and covering the essentials. Simply give them a call on their helpline (0800 345 123).

If your former employer has an HR department or workplace counsellor, they could help you with career planning and advice, references, and contacts. The government’s careers website provides great advice and tools, including help with career ideas, study and training options, job vacancies, writing a CV, and much more. Many firms offer services along these lines, often called ‘Outplacement’ or ‘Career transition’. A Google search for these terms will point you in the right direction. 

If you’re feeling overwhelmed or anxious there are a range of free services that offer support, information and assistance for your emotional and mental wellbeing.

Accept support – and look ahead

Being made redundant can be challenging, but there are people, organisations, and services to help you get through it – and find a new job. So reach out and ask for their help.

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This article is solely for information purposes. It’s not financial or other professional advice. For help, please contact BNZ or your professional adviser. No party, including BNZ, is liable for direct or indirect loss or damage resulting from the content of this article.

References to third party websites are provided for your convenience only. BNZ accepts no responsibility for the availability or content of such websites.