How to make sure you’re financially ready for the looming ‘Great Resignation’

Financial advisers are braced for a wave of post-lockdown resignations in the coming months – here’s how to prepare financially.

‘It’s usually better to be pushed than to jump.’

Although lockdown restrictions are easing around the country, CBD office blocks remain relatively deserted. Corporates have not rushed back to the city – partly due to the end of year approaching and partly because many employees are comfortable and productive working remotely. 

Meanwhile in the US, a phenomenon coined as “the Great Resignation” is occurring with a record 4.27 million Americans quitting their jobs in August – a record for the American market.

The ability to work from home for months has allowed people to rethink their priorities and make job and career decisions to achieve a greater work/life balance.

Although we have not seen this yet in Australia, as corporations transition their staff back into the office, this is tipped to be the breaking point.

New research from Microsoft suggests 40 per cent of global workers are actively considering giving up their jobs in the year ahead.

Separately, we know one in five essential workers in Australia considered quitting their jobs during the course of the pandemic. The crunch may come in mid-January as millions of workers are told to go back to the office after having spent the best part of a year working from home.

 Danny King, founder and principal of Sydney law firm Danny King Legal, says: “The norm moving forward will probably be a hybrid of the two (working from home and office), which will provide the benefits of in-office work (collaboration, learning, socialising), and give employees who need flexibility, like parents caring for children (and especially women re-entering the workforce), some days where they won’t need to be dropping kids at long day care or racing to make school drop off.

“Keeping employees engaged and productive will be a key element in deciding the balance of the two – if an employer isn’t offering the flexibility of a competitor, employees might jump ship.”

As an adviser I have to say it would invariably work out better financially to be pushed rather than jump.

Lisa Sheldon, senior tax manager at Rothsay Chartered Accountants, agrees: “A genuine redundancy occurs when an employee‘s job is abolished and no other person is employed to fulfil it. The set of responsibilities and descriptions that make up your employment no longer exist.

“But note, making someone redundant locally and then employing someone cheaper offshore does not constitute a genuine redundancy.”

 So if your role has been made redundant, there is likely to be a golden handshake.

Danny King adds: “In the case of a genuine redundancy, the Fair Work Act sets out the national minimum standards of payment an employee is entitled to receive, based on their years of service.”

King’s top tips for anyone engaged in the soon-to-be revealed Australian version of the Great Resignation are as follows:

● Don’t panic. There are a range of advantages in having the employment end this way, and the market is so buoyant you are unlikely to struggle to find another gig.

● Check the money. Start with the minimum payable under the National Employment Standards and then double check any applicable modern award, enterprise agreement, contract, and policy. Point out any errors your employer has made and ask that they confirm you will be paid the correct amount.

● Consider whether you want to stay, and how you might be useful in a different way to the employer. If there is a redeployment opportunity that you can see but they haven’t told you about, tell them you are interested. A refusal to redeploy you is a sign that there is more to it than just a straightforward redundancy and creates avenues for you to challenge it.

● Sign nothing. Or at least without being sure you are going to get something in return. Some employers will make it look like you need to sign a release in order to get your entitlements – this is not true. If you sign something, make sure you are being paid beyond what you would get in any case.

● Legal and accounting advice can be super useful. Don’t be shy to get in touch with a good adviser to help you through the change.

James Gerrard is principal and director of planning firm www.financialadvisor.com.au