Think thrice before volunteering for retrenchment. Some employers and employees of companies forced to close during the lockdown are contemplating retrenchment as an alternative to applying for special unemployment insurance benefits, but employees should consider the implications carefully before agreeing to such a measure.
Labour lawyer Michael Bagraim says many employers believe retrenchment will be an easier option that is more beneficial to employees.
Difficulties accessing the newly established Covid-19 Temporary Employer-Employee Relief Scheme has encouraged employers and employees to rather go the retrenchment route because at least employees will get the regular UIF benefits and the processes are well known and it is easy to register, he says.
When you are retrenched you can be paid severance pay and access your pension or provident fund to pay debts.
But opting for retrenchment may be your worst decision yet as there is no guarantee you will be employed again. And accessing your pension or provident fund is like robbing your future self. It also has tax implications.
Owen Nkomo, CEO of Inkunzi Wealth Group, warns that taking retrenchment earlier to get your hands on your fund would have a major impact on the value of your retirement savings.
"It's not advisable to cash in. If you do have some cash, be very conservative with how you use it. Particularly because we don't know how long this thing is going to last."
Don't offer to leave your job amid Covid-19 pandemic
Think thrice before volunteering for retrenchment. Some employers and employees of companies forced to close during the lockdown are contemplating retrenchment as an alternative to applying for special unemployment insurance benefits, but employees should consider the implications carefully before agreeing to such a measure.
Labour lawyer Michael Bagraim says many employers believe retrenchment will be an easier option that is more beneficial to employees.
Difficulties accessing the newly established Covid-19 Temporary Employer-Employee Relief Scheme has encouraged employers and employees to rather go the retrenchment route because at least employees will get the regular UIF benefits and the processes are well known and it is easy to register, he says.
When you are retrenched you can be paid severance pay and access your pension or provident fund to pay debts.
But opting for retrenchment may be your worst decision yet as there is no guarantee you will be employed again. And accessing your pension or provident fund is like robbing your future self. It also has tax implications.
Owen Nkomo, CEO of Inkunzi Wealth Group, warns that taking retrenchment earlier to get your hands on your fund would have a major impact on the value of your retirement savings.
"It's not advisable to cash in. If you do have some cash, be very conservative with how you use it. Particularly because we don't know how long this thing is going to last."