Many companies had to retrench and lay off their employees ever since the MCO took place. COVID-19 has caused Malaysians to lose their jobs and suffer from job loss during a pandemic. If you are one of them, we've listed some practical ways on how you can cope and deal with retrenchment.
The COVID-19 pandemic has affected the livelihood of thousands across the country. Some have lost their jobs, others face unpaid leave and pay cuts.
The effects of the virus and the Movement Control Order (MCO) are proving to be far worse than past crises like the 2008-2009 financial crisis. As of June 2, a total of 12.7 million Malaysians are unemployed. The figure is expected to climb up to 2 million people according to Malaysian Employers Federation executive director Datuk Shamsuddin Bardan.
Retrenchment and unexpected loss of income can cause a great deal of financial and emotional stress. In fact, research has shown that job and financial loss can increase a person’s risk of health problems such as anxiety and depression.
Here are practical steps that you should immediately take after getting retrenched so you can take control of your situation and manage your emotions proactively.
1. Take a deep breath and try to calm down
Realize that it’s normal to experience a range of emotions like shock, distress, anger, worthlessness, helplessness and guilt once you receive the bad news. Try to calm yourself down and take a deep breath. Scan your body to detect any tensions in the muscle. Know that it’s normal to experience symptoms like appetite loss, headache, mood swings, and frustration.
Everybody has their own set of coping mechanisms like crying it out or beating up a pillow - so do what you must to calm yourself down. If you are still experiencing these same symptoms over a period of time, and they’re impacting your life, try to seek professional help because you could be at risk of developing depression or anxiety.
The Befrienders KL is a good source if you need someone to talk to, particularly about difficult life problems like losing a job or source of income; their hotline is 03-76272929.
Before you can focus on positive intentions and regain control of your job search, you must first learn to manage your stress and difficult emotions. This free emotional intelligence toolkit by HelpGuide can be useful for those who need a more detailed guide.
2. Go over your financial commitments
Knowing how to manage your money well is key to achieving financial freedom
When a problem arises or an issue unfolds, it’s human nature to blame and try to fix what is out of our control. While you have little power to change the state of the economy or the COVID-19 pandemic, you can try to gain control of your finances.
To get a full picture of how much money you need within the next few months to one year, identify, categorize, and list down all your financial commitments.
Then gather a paper trail of all your financial statements. These documents reflect your monthly income and expenses, including your bank and credit card or electronic payments, especially because they may vary in regularity. This is helpful for those who don’t keep track or jot down expenses.
Now that you have all your financial statements and other important documents, you can accurately and confidently calculate and list all your financial expenses which may include things like mortgage or rent, car loan, utility bills, student loan, pending healthcare bills and prescription, digital subscriptions, gym memberships, insurance, groceries etc.
Once all that information is complete then start drawing up a budget. A budget helps you keep track of how much money you have coming in, or lack thereof, and how much money you’ll need to cover costs or have spent while you’re going through unemployment.
It’s a useful tool to help you not only manage your finances better, but also plan your financial future. It allows you to stretch your ringgit by getting the most out of your money.
There’s no one size fits all solution when it comes to budgeting. Some prefer to use a budget app or writing it out in a notebook, others fancy a budget calculator or a budget spreadsheet (like below) which can be downloaded here.
A budget worksheet can help sort out expenses in a more systematic way. (Image source: Incharge.org)
All in all, a budget really helps you get a bird’s eye view of all the different financial commitments you need to be accountable for in the next few months to a year while trying to secure another job. )
Contact your bank to see if you can make any changes to your loan repayments. In this instance, take advantage of the moratorium on loan repayments announced by the Malaysian government, where all banks will be offering postponement on loan and financing repayments for 6 months, starting on April 1 onwards. What is a moratorium? To put it simply, you can delay your monthly loan repayments till the end of September this year.
Does moratorium cover credit card payments?
Unfortunately, no. But credit card balances can be converted into a term loan of up to 3 years of not more than 13% per annum.
This works by converting your unpaid balances into 36 monthly instalments of a lower interest rate, and you must pay the instalment in full every month once the deferment period ends. Accrual of interest still applies.
All cardholders regardless of their income level are eligible to participate in this conversion package any time starting April 1 till the end of December this year. But your account should not be in arrears for more than 90 days as of April 1, 2020.
Credit cards also provide great help in emergency situations, but must be managed wisely. Besides paying on time and cutting expenditures to settle card payment, here is an ultimate guide on how to use credit cards responsibly. You can also consider browsing through some of the credit cards available on CompareHero.my here.
Additionally, through the Prihatin Rakyat Economic Stimulus Package 2020, the government has granted a deferment of family insurance and takaful premium or contribution payments for 3 months for affected individuals.
3. Check your retrenchment benefits (a.k.a. severance pay)
A severance package may help sustain your livelihood for the next few months
Find out if you are entitled to any termination benefits after getting retrenched. The law requires that employers provide benefits according to the relevant provisions in Employment (Termination and Lay-off Benefits) Regulations 1990.
But these provisions are only applicable to employees covered by Employment Act 1955 (EA). These folks include:
1. Employees whose salary don’t exceed RM2,000 a month
2. But if their salary does exceed RM2,000:
- Engaged in manual labour.
- Engaged in the operation or maintenance of any mechanically propelled vehicle operated.
- Supervised or overseed other employees engaged in manual labour.
- Engaged in any capacity in any vessel registered in Malaysia.
- Engaged as a domestic servant.
According to Munhoe & Mar Advocates and Solicitor, any employee falling outside the scope of the EA will not be expressly entitled to payment of termination benefits, unless stated otherwise in their contract or in any other collective agreement. But in practice, termination payments are often made to such employees in redundancy situations to safeguard employers from the risks of a claim of dismissal ‘without just cause and excuse.’
The termination payable depends on the employees’ years of service as below, or as stipulated in the contract:
|Length Of Service||Termination Benefits|
|Less than 2 years||10 days’ wages for every year of service|
|2 years or more, but less than 5 years||15 days’ wages for every year of service|
|5 years or more||20 days’ wages for every year of service|
In other cases, you might be entitled to a lump sum payment upon the termination of your employment as compensation for loss of employment, according to the Inland Revenue Board Malaysia (LHDN).
This payment is done in accordance with the terms and conditions of the contract of service and is described as compensation for loss of employment, retrenchment payments, ex-gratia, contractual payment, gratuity, etc.
The big lesson here is to go through your employment agreement or contract and, if possible, get your company’s HR’s to identify the benefits you’re entitled to for being retrenched.
On top of all of this, you’ll also get partial or full tax exemption from the compensation you received. For services on July 1, 2008 onward, RM10,000 is given for each completed year of service as long as employment is with the same employer or with companies in the same group.
Prior to July 1, 2008, the amount of exemption was:
(i) RM6,000 for the years of assessment 2003 to 2008
(ii) RM4,000 for the years of assessment 1987 to 2002
(iii) RM2,000 for the year of assessment 1986 and prior years
4. Claim your unemployment benefits
Dismissal due to misconduct, retirement, and voluntary resignation are not considered Loss of Employment (LOE), and therefore not eligible to claim benefits under EIS.
Thankfully most private employees get to claim unemployment benefits during the period of which they are unemployed.
Under the Employment Insurance System (EIS) Act 2017 administered by the Social Security Organisation (SOCSO), temporary assistance for up to six months is provided to employees who have lost their employment or have experienced some form of loss of income.
How it works is both your employer and yourself would contribute 0.2% of your salary to the scheme (total 0.4% monthly). Like most programs, there are several conditions and rules pertaining to this insurance. For starters, you can claim 80% of your assumed salary for your first month. You can read more in this in-depth piece we wrote on the EIS.
But here’s a list of the wide range of benefits under this insurance:
- Job Search Allowance (JSA) - If you’re eligible, you’ll be able to claim your allowance for up to 6 months.
- Reduced Income Allowance (RIA) – for those with multiple jobs, but lost at least one of them. Payment rates and duration of payment is the same as JSA.
- Training Fee – paid-for vocational training of up to six months.
- Training Allowance – incentives for you to attend and finish your training.
- Early Re-Employment Allowance – for JSA recipients to get back into the workforce.
- Re-Employment Placement Programme – job search assisted by SOCSO.
- Career counselling – job search assisted by SOCSO.
Just remember that you have to do this as soon as possible. To be eligible, you have to start applying within 60 days after your retrenchment.
5. Claim all relevant government assistance due to COVID-19
The Malaysian government introduced the Prihatin Rakyat Economic Stimulus Package 2020 in an effort to preserve the welfare and well-being of Malaysians.
See if you are eligible for any of the benefits below to help cushion the blow of losing a job.
A. Bantuan Prihatin Nasional
- RM1,600 for households with monthly income RM4,000 and below
- RM1,000 for households with monthly income of more than RM4,000 up to RM8,000
- RM800 for single individuals aged 21 years old and and above with monthly income RM2,000 and below
- RM500 for single individuals aged 21 years old and above with monthly income more than RM2,000 up to RM4,000 per month
B. Private Retirement Scheme (PRS)
Allows early withdrawal of up to RM1,500 from Private Retirement Scheme account B without tax penalty from April to December 2020
C. Exemptions on Housing and Business Premise Rentals
- Extend exemption of PPR rental to 6 months for 3,636 PPR houses under KPKT
- Deferment of 6 months rental for 4,649 units of rent to own houses (RTO) under KPKT
- Exemption of 6 months rental for 40,000 public housing tenants under DBKL
D. Electricity Bill Discounts
For domestic customers in Peninsular Malaysia, tiered discounts for electricity consumption beginning April 1, 2020 until September 30, 2020:
- 50% discount for monthly bill of RM43.60 and below (0-200kWh per month) benefitting 3 million (or 40.1%) domestic customers
- 25% discount for monthly bill of RM43.70 to RM77 (201-300kWh per month) benefitting 1.5 million (or 19.8%) domestic customers
- 15% discount for monthly bill of RM77.10 to RM231.80 (301-600kWh per month) benefitting 2.2 million (or 29.3%) domestic customers
- 2% discount for monthly bill of RM231.90 and above (> 600kWh per month) benefitting 0.8 million (or 10.8%) domestic customers
E. Telecommunication Services Incentives
Free internet to all customers throughout the MCO period beginning April 1, 2020
F. Cash assistance for E-Hailing Drivers
A one-off cash assistance of RM500 to full-time e-hailing drivers
Employee Provident Fund (EPF)
As part of the i-Lestari Account 2 Withdrawal Scheme, you can now withdraw up to RM500 every month from your EPF Account 2, starting 1 April 2020. All EPF contributors must be below 55 years old to be eligible.
6. Make your money work for you
Get the most out of your money when you use it wisely
Now that you’ve identified all the different ways to claim your termination benefits, next is to figure out how to really optimize it. Without a doubt, a large chunk of your money should go into paying off large debts and other expenses, as well as to sustain daily finances, but if you have extra, you can consider using it for investments.
Some types of investments to consider:
- Amanah Saham Bumiputera (for bumis)
- Unit Trust
- Fixed Deposit (FD)
- Investment-linked Insurance Plan (ILP)
- Real Estate Investment Trust (REITs)
- Exchange Traded Funds (ETFs)
- Exchange Traded Bonds and Sukuk (ETBS)
Here are some quick tips from us when it comes to investing:
Don’t invest all your money into just one investment
Don’t put all your eggs into one basket because you stand a chance to lose all your hard-earned money if the investment doesn’t turn out good.
Diverse your investments
Build a portfolio consisting of low, middle and high-risk investments. Example: REITs, overseas fund unit trust, and small-cap stocks, etc.
Make an informed decision
Always do your research before investing your money. Find out what type of investments work for you and why. Remember to only invest in a business, stock or industry that you are confident with or have knowledge about.
7. Check on your family to see if they are okay
Our best support system is our family
While self-care is crucial after getting retrenched, it’s also important to check on your immediate family who may also be affected by this unfortunate event. A difficult event like retrenchment can increase the pressure and tension in the family.
Discuss the impact of the situation with your partner and find ways to address it in a healthy manner together. If your partner is also a working professional, you may need to discuss the possibility of relying on them financially while you look for a job.
On the contrary, if your partner is not able to bring in sufficient income, then you’ll need to discuss how to bring in the funds together. You may need to rely on each other’s savings for an extended period of time or in the worst case scenario, get help from each other’s family members.
Some parents choose to explain the situation to their children for transparency, some others choose not to. But either way, it’s important to not scare them when managing such a distressing event. Try to maintain as much normalcy as you can by continuing to engage in enjoyable activities with your children. Do note that reduction in spending may affect your child’s other activities like musical classes etc.
If you’re single and living with your parents, talk about financial expectations in your household now that you are unemployed.
8. Continue nursing yourself
It’s tempting to lose yourself when faced with a difficult situation like retrenchment. But try hard to take care of yourself by ensuring all your other needs are met. Take this time to start eating healthily and getting some regular exercise going. Research shows exercise can help elevate our moods.
Avoid substances like alcohol or cigarettes during these difficult times. Some may tempt to ‘self-medicate’ or use it as a temporary escape from reality, but it will only worsen your emotional state and increase your risk of developing depression. They don’t come cheap either and could further create a hole in your pocket.
It’s also important to get emotional support in these difficult times, one way to do this is by talking to family and friends to help you remain positive. If you can afford it, get professional help from a therapist. Undeniably talk therapy at private centres may be costly, so an alternative is to get medication from public health institutions.
9. Take a break, but stay occupied
Spend more time working on your emotional and mental state. Is there a book that you really wanted to finish that you never got to? Now’s the perfect time to do that. Maybe there’s a side project or volunteer activity you really wanted to engage with, dedicate your time to that cause. It’s important to find the right balance between rest and keeping occupied with activities that are good for the mind and body.
In the meantime, look out for side jobs, part-time gigs and freelance work to help sustain your livelihood. Jobs like freelancing, online tutoring, delivery jobs, dropshipping, small online businesses, among others, can help pay the bills.
10. Upskill yourself and go all-out in your job hunt
After settling all the financial matters and letting yourself process your emotions, it’s time to get back into the game. Perhaps you’re interested in trying out a different industry or want to make a jump in your career. Take some time to mull over your next career move.
Go all out: make sure your CV and LinkedIn page is up-to-date, and let recruiters know that you are on the lookout for new opportunities. Apply for as many relevant opportunities that come your way, but remember to be strategic about it as well. Take this opportunity to upskill yourself by taking online courses and webinars to keep abreast of the latest knowledge and skills in the industry. Research on what skills the industry needs, and learn them so that you can stand out from the crowd.
Optimize your use of other social media platforms such as Facebook, Instagram, and Twitter because employers usually post job postings there as well. One guy we spoke to got his job off of LinkedIn after a connection from his current employer approached him.
It’s okay to feel crappy sometimes, but don't worry - you’ve got this
Losing a job is never easy, especially during these difficult times. But don’t expect to feel okay or have all the answers on the first day, or even weeks after finding out you got retrenched. Remind yourself that it’s okay to feel insecure about the future.
Practice a lot of patience and self-compassion. All forms of loss whether it be the death of a loved one, loss of a relationship and a loss of a job, takes time to process and recover. Don’t beat yourself for feeling overwhelmed at first. Find solace and strength in the fact that this too shall pass just like other difficult moments that you’ve overcome in life.
Realize you are not alone in this struggle and that there are other people out there who are experiencing a similar situation.
Despite how gloomy the situation might be at the moment, there’s always light at the end of the tunnel. Just like any challenge or journey in life, retrenchment, too, is a stage in life that many of us might have to go through, and the first step to recovery is always the hardest.
But it’s comforting to see various initiatives by the government to help combat the issue of unemployment and financial distress in the country. Let’s try to turn every disaster we face into an opportunity. Good luck!