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As the furlough scheme changes and more business face the choice of reopening to the ‘new normal’ or closing altogether, redundancy is at the front of many people’s minds.
With an uncertain economic climate, lots of us will be wondering just how safe our jobs are. So, if redundancy happens, how should you deal with it? And what steps can you take to get back on your feet? The good news is, there’s plenty you can do to soften the blow.
We’ve put together an all-in-one redundancy action plan. Don’t forget to check our 11 top tips for coping with redundancy too – it’s full of handy hints and some key advice.
Redundancy is not the same thing as firing an employee. In a nutshell, redundancy means your job no longer exists. You’re let go because there’s no role for you – not because you’ve done a bad job.
There are lots of reasons this could happen, including staff cutbacks, a business relocation or merger, advances in technology, or because the company closes down entirely. In other words, it’s the job that has become redundant, not you as an individual – so try not to take it too personally.
If fewer than 20 employees are being made redundant, your employer doesn’t have to follow set rules about minimum consultation periods. They must, however, speak to you about why you’re being made redundant, and any redundancy alternatives. For example, they may offer you part-time hours, or move you to a different department.
For a group of 20 employees or more, a consultation must happen. This consultation must happen between your employer and either a trade union representative or an elected employee. For 20 to 99 redundancies, the minimum consultation period is 30 days. For more than 100 redundancies, this consultation period must be at least 45 days.
The consultation must cover things like:
If you’re on a fixed term contract, you don’t need to be consulted about redundancy. Your contract will end at the agreed date. If your employer needs to cut your fixed term contract short, they must consult you about redundancy and pay any notice periods due.
Redundancy can come as a nasty shock, and you may want to get out of your place of work as fast as your legs will carry you.
As tempting as it might be to get angry at your boss or colleagues, it’s in your interest to stay calm and professional. There’s a good chance that your boss had no say in making you redundant, and probably feels awful about having to let you go. In any case, stay on their good side because you’ll probably need a reference from them at some point.
However, there are several steps you should take. These will make your situation much easier to deal with in the long run. Before you leave your employer, make sure you grab the following things (and no, I don’t mean the office furniture!):
If you face any problems, these details will make it much easier to sort them out, which leads on to our next question…
If you are made redundant, you’re entitled to either work out your notice period, go on ‘gardening leave’ (when an employee is required to serve out a period of notice at home or ‘in the garden’) or receive pay in lieu of notice.
Check your employment contract to find out what your notice period is. Your employer should let you know which one of the three circumstances above applies to you.
If you’ve worked for your employer for at least two complete years, you’re also entitled to redundancy pay. At the moment, the legal minimum redundancy pay is:
If you’d like to know how much redundancy pay you’re entitled to, check out this simple calculation tool from GOV.UK now.
Unfortunately, statutory redundancy pay is capped, currently at £544, and can’t reach more than £16,320 in total.
Most employers will have their own redundancy policy and pay arrangements – which are often more generous than the legal minimum – so it’s well worth checking what they are. On the upside, you don’t pay income tax on a statutory redundancy payment. Other redundancy payouts (from your employer) may be taxable however.
If you feel you’ve been mistreated by your employer – or not received the redundancy package you’re entitled to – get in touch with one of the following:
This is where your trade union membership will be worth its weight in gold. Your union can fight your corner, help you understand the legal jargon and could even wangle an improved redundancy package on your behalf.
The Trades Union Congress’s WorkSmart website is a good place to find out more about your rights.
If you’re not a member of a trade union, head for your local Citizens Advice Bureau, where you can get advice on your rights as an employee. Find your local office, call their number, or chat to them online here.
Your natural impulse will probably be to rush around trying to get a new job as quickly as possible. But while it’s important to start earning again, take a few minutes to take a deep breath and weigh up your options.
Redundancy may come with a silver lining. Maybe it will be a fresh start? Just make sure you do your research properly and if you don’t get another job straight away, use that extra time constructively.
You could focus on updating or broadening your existing skills set – or you could gain the new knowledge needed to make a change of career. Apart from anything else, taking action will show prospective employers that you’re motivated and willing to take the initiative.
You could do voluntary work in a field that interests you, or take a course that might help you get that job you’ve always wanted.
Some courses reduce their fees for people who aren’t in full-time employment. And others cost nothing at all! Read Boost your job prospects – for free for more on this.
It may also be worthwhile retraining or taking a different career path if need be. Here are some useful sites to start:
The main thing is not to lounge around the house all day feeling sorry for yourself. Redundancy is awful, but giving up on work completely will make you feel ten times worse. Structure your day as though you were still operating within work hours: Get up and browse job boards, work on your courses, and update your CV as necessary. Do take breaks for lunch and exercise!
Keep yourself busy and resist moping around in your PJs throwing darts at a picture of your boss’s head – however tempting that might be!
Finally, check out MoneyMagpie’s extensive Make Money pages for plenty of ways to earn a bit on the side while you look for that dream job.
Redundancy is something many of us won’t be able to avoid – it isn’t your fault and isn’t necessarily related to your performance at work.
Fortunately however, there are things you can do right now to soften the blow if and when the worst happens.
Some people choose to take out redundancy insurance (also known as unemployment insurance). Essentially, this provides a limited level of financial cover in case of redundancy.
If you go down this route, it’s important to be aware of the limitations. Different firms provide different levels of cover, but generally speaking, the following rules apply:
As you can see, redundancy insurance tends to come with a heck of a lot of strings attached. On top of this, it can actually be very difficult to find a policy that just covers redundancy. Most combine accident, sickness, and unemployment in one pricey plan.
The more competitive providers offer ‘unemployment-only’ plans with a monthly benefit (i.e. cover) of £1,000 for a monthly premium of around £35-£40.
That seems an awful lot to pay for benefits which only last 12 months. And of course, you might not even need it! Think about if it’s worth it for you.
If you don’t want to hand your hard-earned cash to the insurers, there is another way to safeguard against financial disaster if you’re made redundant.
You can ‘self-insure’ by starting a savings pot specifically designed to tide you over if the worst does happen.
For example, setting aside £200 a month will mean you have a fund of £1,200 (plus interest) to draw on if you get made redundant in six month’s time. That should tide you over for a bit while you’re hunting for that new job. Of course, the more you can set aside the better, but anything will help. Click here to choose the best account for you.
£200 is obviously a large savings commitment to make every month. And it does mean you have a limited window to find another job before your savings pot runs out.
On the other hand, your money will be earning interest for you all the time it’s in the savings account. You also won’t have to worry about the insurers wriggling out of paying your claim.
In any case, you’ll have an emergency savings cushion to guard against other unexpected financial problems.