PRESS RELEASE
APPEARED IN THE TORONTO STAR – SUNDAY, OCTOBER 10, 2004
“There’s nothing funny about losing your job
It ranks on the stress scale with the death of someone close
But if it happens, your best bet is to seek the help of a professional
MALCOLM MORRISON
CANADIAN PRESS
The line ‘You’re fired’ has assumed joke status thanks to the smash reality TV show ‘The Apprentice’ starring Donald Trump.
But getting terminated is anything but funny – it’s an emotional experience that on the stress scale is right up there with the death of someone close.
And depending on how you handle the upheaval, it can end up costing you plenty in taxes and lost opportunities for topping up your retirement savings plan.
‘If in fact you find you have lost your job, or are about to lose your job, I think the first thing is don’t panic and don’t overreact,’ says Patricia Lovett-Reid, senior vice-president at TD Waterhouse.
‘It’s about standing back, recognizing this is a stressful time, you’re going to have to make what feel like very difficult personal and financial choices.’
Once you have suppressed panic and rage, you will want to make sure you get what you’re entitled to.
And since you would be feeling rather fragile around this time, there is no point in trying to do it alone. So get some professional help.
‘I don’t think you can assume that most companies these days are necessarily going to do the right thing,’ says Norman Grosman of Toronto law firm Grosman, Grosman & Gale.
‘Remember: first of all, they’re terminating you, perhaps after long and loyal service, and the severance package is something that goes right to the bottom line without any corresponding productivity’, Grosman observes.
‘So there is natural tendency on the part of companies – and this is not a comment on all companies by any means – to approach this in a lean and mean way’.
Grosman believes the average person lacks the sophistication to know whether they’re being treated fairly, and strongly recommends spending
Once you have suppressed panic and rage, you will want to make sure you get what you’re entitled to
money on competent legal advice.
It may run you $250 to $500 for that counsel, but ‘the worst-case scenario is it’s going to give you peace of mind that you have been treated fairly’.
Whatever you do, don’t sign any release form immediately, Grosman advises.
‘If you feel pressure or being threatened, it is a very significant sign that the stars are not properly aligned and you need advice.
Having arrived at a settlement, the worst thing you can do is to take the cheque down to the bank and plop it into a savings account.
Jonathan Sceeles, a certified financial planer with Edward Jones in Toronto, says timing is important’.
For example, if you are terminated early in the year, your income for that year so far would be relatively low and if you don’t find another job the tax repercussions may not be painful.
‘But if you’re late in the year and you’ve already earned a good chunk of your annual salary, and this salary package is going to be added on top of that, and you don’t attempt to shelter any of it by transferring any of it to an RRSP or whatever, then you’re going to get hit with a whack of taxes come year end,’ he said.
Sceeles says one option is to park the money in a short-term GIC within an RRSP until you know what your employment situation is going to be.
‘Then you can withdraw it and if you’re unemployed for that whole year or a portion thereof, the tax repercussions of drawing the money out in a low-income year are going to be less severe than it would have been if you had used it in the high-income year’, he said.
Lovett-Reid points out that ‘you’re entitled to roll $2,000 into your RRSP for every year you worked for the company before 1996 plus an additional $1,500 for every year before 1989, if you weren’t enrolled in a vested company pension. This is on top of your regular RRSP contribution for that taxation year.
She also advises applying immediately for employment insurance.
And if you think you are going to run into problems with monthly payments, be upfront with your creditors.
‘More often than not during your period of difficulty, they’re willing to structure a deal for making payments while you are out of work,’ she says.
‘And resist the urge to use credit cards unless it’s absolutely necessary. You’ve really got to re-evaluate your budget at this point.’”
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