Ask LH: What Are The Pros And Cons Of Taking Redundancy?

Ask LH: What Are The Pros And Cons Of Taking Redundancy?

Dear Lifehacker, I have been working in procurement for a large resources company for the past eight years. I wouldn’t say I love my job but I do enjoy it. Last week myself and the 30 others in my department were sat down and told that redundancies are being made by the end of the month.

We have been given the option to put our names forward to be chosen for redundancy or we can elect to ride it out and see what happens. I have spent the weekend trying to make a choice for the good of my family and my career, and I could use some help. What are the pros and cons of taking a redundancy or, on the other hand, of trying to keep the job I have? Thanks, Job Jitters

Redundancy picture from Shutterstock

Dear JJ,

Trying to choose whether to take a redundancy is always difficult, and there certainly isn’t a single right answer to what to do. Your personal circumstances also matter enormously: the more dependents you have, the scarier change will seem. These are factors you might take into consideration:

Pros of taking redundancy/arguments against sticking around

  • Most people will change jobs several times in their careers. Taking redundancy lets you do so and gives you a small-ish nest egg, meaning you won’t necessarily have to take the first job on offer when you start looking.
  • If your business or sector is in trouble, taking redundancy will usually work out better financially than being stuck in a company that goes broke,
  • If your department is being reduced in size, everyone who does stay is likely to be worked much harder. Taking redundancy could make sense if you’re already feeling stressed.

Cons of taking redundancy/arguments for sticking around

  • If a large department is being reduced, there will be significant competition for similar jobs in other fields, which means scoring a job at the salary you want where you already live will be more challenging.
  • If the business retains you, it clearly values your skills and is potentially more likely to promote you.
  • The older you are, the more difficult it may be to score an alternative permanent job.
  • You can still seek alternative jobs while sticking in your current post.

When balancing these issues, you need to honestly assess your own value to the business. Do you perform a similar role to numerous other employees? Do you work well with your colleagues? What job did you see yourself performing three years from now? Those factors will also influence your choice.

We’d love to hear additional comments and suggestions from readers, especially those who have found themselves in this situation. Good luck!


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  • We’ve recently had a round of voluntary redundancies at my work and I seriously considered taking one. I’m not really satisfied in my current position but I decided that I also didn’t have a plan of attack if I left. The two people who ended up taking the voluntary redundancies were planning to leave anyway. I think that’s the best way to look at it. If you’re only thinking about leaving because of the redundancies then it’s probably not the right decision.

  • Another con, if it’s a government department, you can’t work in any other government department for a period of time. Job market in Canberra is in the pits right now and govt departments will be offering redundancies, finding another job here wont be easy.

    • Yep, that’s right. Most government redundancies will prohibit you from applying for another government position for 12 months. And there are very few circumstances where the payout can cover you for that length of time.

  • A fairly illogical set of arguments to me, but then – it’s pretty hard to be purely logic based when it’s a situational thing.

    To some degree it depends what the redundancy actually is.. I have a friend who was made redundant recently who I believe was kept on the books for 2-3 months after leaving on full pay/benefits, a huge redundancy, and their long service leave cashed out.. It’s an incredible amount of money. To some degree they would be foolish to NOT accept that kind of instant cash out.

    It doesn’t pay to NEVER take a chance, but it counts to take the RIGHT chance.

  • Assess where you are and what would work for you. I’ve been through this in the not too distant past and it gave me space to assess what I really wanted.

    After 8 years in a resources company hopefully the payout may be of a reasonable size if you take it, which will allow some thinking time. If the company is offering support from external career consultants take it and use their skills to your advantage.

    My thoughts on my experience here

    • Good advice and an interesting read on your blog. Thanks for sharing 🙂
      I certainly like your approach to doing house renovations for a while to figure out what you want to do.
      The payout with all the extras like leave, long service and shares is pretty much a years gross salary for me.
      I have now requested to be listed for VR and figure I will work shifts at Bunnings and do house repairs while I look for the perfect fitting next step in my career.
      As @cheshirecat spoke about below, there is a possibility that even though I have opted for the VR, they may not want to let me go and will reject my request.
      Now we wait….

    • Seriously – why does my account keep going from being fine to post instantly and into moderation status?? This would be my 4th time being moderated.

  • In a similar position only ours is company wide voluntary redundancy, but they can say ‘no we want to keep you’ and I’m pretty sure I fit in that slot (basically we have been told no engineers will get one). I would get about a years salary but there’s no real other opportunities in this town so we would need to leave. But work is also a terribly demoralizing place ATM so I’m considering leaving even without the VR. I would get paid much more somewhere else but my wife would earn less and we live here for lifestyle reasons. I’m also hoping to get a promotion in the restructure…so we sit and wait and see what happens….it’s always a tough choice even when it seems like an easy one.

  • If you have a passion to go into business yourself, sometimes a VA can be just what you’re looking for. A comfort cushion of sorts till you get up and running and that initial capital or perhaps opportunity to put forward a better case to a financier with a bigger chunk of your own sums. If you are sticking to the industry you are already working in, you can even poach or offer other team members taking a VA.

  • Redundancy can be tricky.
    Voluntary is at least optional.
    Forced is well, forced.
    My company has let about 50% of the people in my dept. go but they were forced redundancies – approximately 50 people in last 2 months. (Telecommunications Industry)
    Ironically, those that wanted redundancy weren’t offered it due to skills and experience and others that wanted to remain were let go. We lost some people with fantastic skills and experience who were employed elsewhere within a week. Some packages were between 60-83 weeks plus LSL etc. so big dollars.

    I have been flip-flopping on how I’d feel about redundancy and eventually (after too much uncertainty) decided it would be OK and possibly a good impetus to implement change in my life. Of course, I was one of the staff they’ve retained so now I have to re-motivate myself and re-invest myself in the longer term vision for the company. But the nature of our work presently is unreliable (NBN contracts) so there’s ongoing doubt and fear regarding longer term prospects.

    Our industry has had many people let go which means anyone hiring can pick and choose – leaving the ‘average’ unemployed. If you’re entire Industry is going through uncertainty then VR may be good if you know the work is going to pick up in the short-medium term but staying is also a good idea as you are in a prime position to take advantage of growth when it does arrive (as mentioned in the article). I’m currently running with that mindset – stay and be in prime position for growth/promotion.

    But i am also prepared for redundancy as change is often healthy and invigourating.
    Ultimately, it comes down to an individual’s situation in life, work, ambitions and satisfaction.

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