By Chris Torney
The latest UK jobless figures* show that unemployment had fallen by 34,000 in the three months to May, with 2.47 million people now out of work.
This was better news than most analysts had expected, but it could turn out to be a flash in the pan: with the Tory-LibDem coalition government planning drastic cuts in state spending, Britain’s jobless total is expected to rise sharply over the coming months as thousands of public sector workers are laid off.
Ministers hope these layoffs will be offset by employment increases in the private sector – but this is by no means guaranteed, and many analysts now believe the UK is at risk of slipping back into recession.
So what can you do to protect yourself from the worst effects of redundancy, should it ever happen?
Be prepared
There is no point simply hoping that your job is safe and burying your head in the sand. It makes sense to work out how you would cope if you were made redundant, and take some simple steps to make sure you’re as well prepared as possible.
Dust off your CV
Competition in the jobs market is already fierce, and the situation is unlikely to improve any time soon.
So if it’s been a long time since you applied for a job, now is the time to get your CV up to date and think about what your next career move could be.
Consider signing up with recruitment agency or applying for new vacancies: even if your own position does not turn out to be under threat, you could end up with a better job.
Know your rights
Find out in advance what redundancy package your employer would offer, so you have an idea of what sort of pay off you would get.
Companies must at least give laid-off workers statutory redundancy pay, which is equal to a week’s pay per year of service, provided you have been with the firm for two years or more.
Workers over 40 get a week and a half’s pay for every year of service, while those under 22 get half a week’s pay per year.
You should also be paid, or kept on, for the whole of your notice period.
Many employers offer redundancy terms that are more generous than these statutory minimums, so check your contract or staff handbook.
The WorkSmart website offers more advice – for example what to do if you think your employer has treated you unfairly, or where you stand if you are offered another job rather than being made redundant.
Insure your income
It is possible to soften the blow of redundancy by buying insurance that will cover essential expenses if you lose your job. There are many types of policies that claim to offer this sort of protection, but some are much more useful than others.
Payment protection insurance, which covers personal loan or credit-card repayments if you are unable to work or laid off, is no help with major expenses such as a mortgage or a family’s living costs and is also quite expensive, given its lack of cover.
An option worth considering is mortgage payment protection insurance (also known as accident, sickness and unemployment cover) or income protection insurance.
These policies will pay you a certain monthly sum if you are made redundant. The more of a pay-out you want and the sooner you want payments to start, the higher the premiums will be.
Income protection insurance is normally the more expensive of these two types because it pays out for longer – in some cases until retirement, if you fail to find further work.
Whatever type of policy you choose, you must set it up before you are informed about any impending redundancy in order to be able to claim.
Cut your debts
If you can, pay down your debts such as credit cards as much as possible while you are working. If you’re out of a job, making repayments may become impossible – but this will result in mounting interest charges.
*Data published 14 July 2010
