Coping with redundancy
For most of us, there’s no longer such a thing as a ‘job for life’. There’s a good chance that we all know someone who has been affected by redundancy at some point in their lives. But being told by your employer that you have been made redundant can be a traumatic and unsettling experience, leaving you unsure of what to do next. So how can you cope with redundancy?
Dealing With The NewsThe first thing to understand is that your job is being made redundant, not you. Your company may be forced to make cost savings, perhaps the business is being closed down or moving, or is forced to downsize because of the economic climate. Unfortunately the simplest way for them to rearrange their finances is to cut back on some of their most expensive costs – employees. Try not to take the news personally.
Know Your RightsOnce you have been given the official confirmation of your redundancy, you will also be given details of your ‘settlement’. Depending on how your company deals with redundancies, you may feel that the money you receive is fair, harsh or generous. It is important to know what you are legally entitled to. Everyone is legally entitled to statutory redundancy pay, which is tax free. The amount of a statutory settlement depends on your age, your length of service with the company and your weekly salary, as follows:
- You receive half a week’s salary for each complete year of continuous service below the age of 22
- You’ll receive a full week’s salary for each year of continuous service between the ages of 22 and 40
- You get a week and half’s salary for each year of service above the age of 41
- You do not get any statutory redundancy settlement if you are over the age of 65
Your company may choose to pay you an additional amount of money over and above the statutory salary settlement, but they are not legally obliged to. If you feel that your settlement is too low, talk to your employers. Your employer should give you a written statement explaining how your redundancy settlement has been calculated. If you are still not happy with this, you should contact your union, or apply to an employment tribunal. You will need to contact them as soon as possible, because you will lose the right to make a claim six months after the redundancy date.
What To Do NextDepending on your length of time with the company, and the generosity of the settlement, you could find yourself with a large, tax free, lump sum after being made redundant. If so, you will want to think carefully about the best way to use this money, and how long you will be able to make it last.
The best starting point would be to take a good look at your finances. Try to pay off your debts if they make up a large proportion of your monthly outgoings. It might also be worth contacting those companies that you owe money to and explaining the situation to them, they might be able to help by suggesting a finance plan that would reduce your payments for a while. If you have payment protection insurance on your credit cards or mortgage, now is the time to contact the insurance companies and let them know your new employment status.
You should also try to find out whether you entitled to any state benefits, such as unemployment benefit or council tax assistance. This is money that you are entitled to, as you made regular payment contributions from your monthly pay packet each time you paid income tax.
The PositivesPeople respond to redundancy in different ways. Some may be keen to get straight back into work, spending all their time looking for new jobs and arranging interviews. However, once you’ve gotten over the initial shock of redundancy, you may find that being able to start afresh gives you a new lease of life. Perhaps your job was holding you back from the things you always wanted to do. Go travelling? Learn a new trade? Finance your own small business? This is the perfect time to realise your ambitions.
At some point you will have to explain your redundancy to a potential new employer. This shouldn’t be a daunting prospect. Employers understand that redundancy is a relatively common experience now, and it doesn’t reflect badly on the person made redundant. You should be honest about the reasons why your company let you go, explain that you’re eager to find a fresh challenge, and demonstrate to your new employer that you coped well with the experience. These are qualities that any new employer will be looking for.