Tips and advice on how to deal with being made redundant
The dreaded ‘R’ word. It’s one you hope never to hear. But, worryingly, redundancies have been on the increase ever since the economy took a tumble.
The current economic climate has forced many companies to close and put many jobs under threat. Employers often resort to making staff redundant as a way of cutting costs. Implementation of new technology/systems or a workplace relocation can also deem a job redundant.
Who can be made redundant?
- Any employee under contract of employment – written, verbal or a combination. Just turning up to work constitutes an agreement of employment.
Who is eligible for a redundancy payout?
To be eligible for a payment, you should meet all of the following criteria.
- You need to have been in continuous employment for at least two years.
- You are over the age of 20 at the time of dismissal.
- You have been dismissed by reason of redundancy.
What are your entitlements?
Unless a more generous settlement is written into your employment contract, you will receive only the statutory minimum redundancy pay. This is based on how long you’ve been employed, your age and your weekly pay.
Statutory Minimum Redundancy Pay
The amount is calculated as:
- Aged 41 or over - One and a half weeks’ pay for every full year
- Aged 22-41 - One week’s pay for every full year
- Aged 18-22 - half a week's gross pay for each year worked (as long as you worked in the same job beyond the age of 20).
If your employer doesn’t give you redundancy pay when you’re entitled to it, you should write to them asking for payment. If your employer still refuses to pay or cannot make the payment, you could make an appeal to an Employment Tribunal.
Note: The 2009 budget announced that the weekly rate of statutory redundancy pay will increase to £380.
Tips for dealing with redundancy
Budget: Draw up a comprehensive plan of your out-goings. Where can you save money and how can you make best use of your cash? Speak to a financial advisor if necessary.
Claim your benefits: Depending on your savings and record of National Insurance contributions, you may be entitled to state benefits. Make an appointment with your local benefits office to find out more.
Invest: If you’re lucky enough to receive a substantial payout, think carefully about what to do with the money. You could pay off debts, or put it in a higher-interest savings account or ISA (check out Confused.com’s Guide to Tax-Free Savings). Again, consider speaking to a financial advisor if necessary.
PPI: If you’re still employed and worried about the future of your job, you might consider getting payment protection insurance (PPI)? This could help pay a proportion of your monthly bills and offer support for a fixed period while you hunt for a new job.
