With the global financial markets in turmoil, many people are starting to query how safe their jobs are. With redundancy on many people’s minds, now is the time to start planning for the worst.

The team here at Moneytowers have put together a redundancy guide below which gives you all the pertinent information on what redundancy payments you are entitled to, your legal rights, and how to get help if you are being made redundant.

Redundancy is not always a bad thing. Whilst it can be a tough experience, it can also help push you towards a career change or entrepreneurial streak that you always wanted to express yet never had the courage to follow.

Sorting Your Finances

Whatever your financial or job position, it is important to get your finances sorted – even if you are sure your job is secure. Work on getting your credit score as good as it gets to ensure that if you are made redundant, lenders will be happy to give you credit if you need it.

If you think you will need some form of credit or loan to tide you over, get researching now to make sure you get the best rates and the best deal for you.

If you can pay off as many debts as you can, even if this means eating into your savings. It is important to keep emergency funds (and it is a good idea to keep money in ISAs thanks to their tax free wrapper) however any ‘excess’ savings you have generally should go towards paying the debts off.

Car insurance will often go up for those who are unemployed. If your car insurance renewal is up soon and you think you will be made redundant in the near future, get your policy sorted as soon as you can.

Mortgage companies will give you a break if you find yourself in financial difficulties. It is important to talk to them before you find you are unable to meet the payments – they may be able to give you a payment holiday or allow you to switch from a repayment mortgage to an interest only one, thus reducing your monthly outgoings.

Have you got excess goods in your house that you can sell for extra cash? Can you take up a second job on the weekends to help up your income? Keeping your cashflow is important if redundancy is looming therefore it is in your best interests to try and boost your income.

Networking

Even if you are not facing redundancy, it is important to network as you may hear of openings before they are publicly available, or your contacts can help put a good word in for you when you apply for a job.

Payment Protection

There are many forms of payment protection scheme which can help if you lose your job. Payment protection schemes are a form of insurance which you pay into whilst you are employed. If you lose your job through no fault of your own, the insurance will help cover some of your costs. However be warned: if redundancy is foreseeable when you take the insurance policy out, it may not be valid.

Redundancy

Your employer must treat you fairly. If you feel you have not been treated fairly there are laws which are on your side.

Redundancy Payouts

When you are made redundant, there are three types of payment you can expect:

1) Notice: Your employer should give you full notice of termination according to whatever your employment contract states. If there are no clauses in your contract, you should be given one week for each complete year of service up to 12 weeks. Your employer may choose to give you pay in lieu of notice or pay you for the period without you actually attending work.

2) Holiday Pay: you are entitled to be paid for any holiday accrued which you have not taken, or you may be given the option to take your holiday during your notice period

3) Redundancy Payout: The first £30k of any payout is always tax free. After two years of continuous work with a company, you will qualify for the minimum statutory redundancy payment – any less than 2 years and you are not entitled to a payout. Redundancy payouts can be complex so we suggest you use the Government’s redundancy payment checker here to work out what you are entitled to. Note that some companies can be generous and may give you more than your statutory payment when you leave.

Redundancy because the company is in Administration

If the company has gone bust, it is safe to assume there may not be the money to pay you what is due. If this is the case, you will need to claim Statutory Redundancy Pay (SRP) which will be organised via the insolvency practitioner dealing with the company’s administration. The money that you are paid comes from the National Insurance Fund.

Redundancy Legal Advice

There are plenty of agencies you can speak to to get free legal advice on your redundancy. We suggest speaking to the Citizen’s Advice Bureau as your first port of call.

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