Dealing with Redundancy
Dealing with redundancy is one of the situations in life we fear the most. Especially if you have been working with the same company for a number of years, all of a sudden you have to blow the dust off your suit and get your interview skills up to scratch which you probably haven’t used for years. This is additional to dealing with your financial situation. You have a mortgage or rent to pay, plus bills and debts mounting up. A recent report warns that unemployment will rise by 350,000 in total over the next year, and as we head into recession, a major part of this will be due to redundancy.
Here are a few points to help you through;
You are entitled to work out your notice period or your employer may offer you a one off payment in lieu. You will also be entitled to any SSP (Statutory Sick Pay).
Redundancy pay differs from company to company and will depend on the contract you signed with your employer. As an employee, the minimum you will receive is;
- Aged 22 to 41: At least one week's pay for every full year of employment.
- Aged 41+: At least 1½ weeks' pay for every full year of employment.
If you have a pension and want to save some money on your payout, ask your employer to transfer part of your redundancy into your pension, this way it wont be eligible for National Insurance Contributions. You may even be able to negotiate a higher payout without it costing your employer a penny.
Check your pension
Make sure your pension is included in your severance pay as you should be able to take this over to your next employer.
Know your rights
If you have recently been warned you may be up for redundancy or you have been made redundant, do your homework and make sure you know your rights. Read any contracts you signed when you joined the company and request any policies from the companies Human Resources department or trade union. Employers have to follow procedures to protect them against ‘Unfair Dismissal’ cases which could lead them to getting sued and being forced to pay compensation.
Don't agree anything verbally
All ways get everything documented in black and white or by email. This way you are protected if there are any disagreements before you leave. If you were to agree and conditions with your boss verbally don’t be afraid to ask him to back it up in writing.
Usually when redundancies take place, a ‘dismissal meeting’ is required to discuss and agree on a severance package. Try not to leave on bad terms, you may need to use the company as a reference with your next employer.
Try to retain benefits
Before leaving, ask your employer if you can retain any benefits from your contract. i.e. life or medial insurance or family income protection.
Ask your employer whether transitional benefits can be included in your leaving package. From the day you receive your P45 you may have six months or more with no life cover, medical insurance, or family income protection.
It may be possible to at least retain this cover until the normal renewal date.
Dealing with your creditors when unemployed
If you are out of work for some time due to redundancy and you are struggling to make your repayments, contact you creditors immediately and let them know about your situation. Ignoring phone calls and letters won’t help and will just make things worse. If you have taken out any PPI (payment Protection Insurance) this may cover you until you find new employment. Check your paperwork carefully as PPI is forever under scrutiny from the Office of Fair Trading for being mis-sold and generally difficult to claim.
If you don’t have PPI
If you don’t have any PPI insurance there are other options available to help you deal with your creditors. The UK Debt Advisor can help you negotiate a temporary term with your creditors and reduce your repayments until you find work through a Debt Management Plan.
If you have been made redundant and need some help with debts call us free on 0800 043 2027 or use our free call back service.