Coping With Redundancy

During the economically challenging times we find ourselves in, a decrease in consumer spending will mean many companies will be struggling to maintain their profit margins.

Sadly, cutting workforce is a common method for a business feeling the pinch to attempt to ride out rough times.

If your job has been deemed expendable by senior management, there is little doubt you will find yourself facing challenging times. However, by handling your redundancy in the best way possible, you will give yourself a platform from which to move forward with your working life.

To assist you in this venture, this article aims to offers sound advice on the key issues of dealing with redundancy, in the hope that you can hit the ground running and proceed to better and brighter things.

Legal Issues

The most important thing to do when you are made aware of imminent redundancy is to make sure you are being dealt with fairly and lawfully. The first thing to check is Notice.

Fair Notice

Notice is the term used to decribe how much warning you are given of the fact your employment will be terminated. When it comes to redundancy (as opposed to being given the sack) it is illegal for your employer to make you redundant and terminate your employment at the same time - you are entitled to a period of 'Fair Notice'.

How much notice you are given will depend on how long you have worked for the company. At time of writing (October 2011) The Department of Trade and Industry stipulates the following:

  • If you have worked for the business for a period of less than one month then no notice is required.
  • If your period of employment is more than one month but less than two years, one week of notice must be given.
  • After two years the procedure is to award one week's notice for each year worked i.e. two weeks notice for two years worked, three weeks for three years worked, and so on up to a maximum of 12 weeks.

Redundancy Pay

Redundancy Pay is the money an employer has to pay you after your employment has been terminated. Remember, you have not been sacked and are therefore due compensation from your employer over their decision to take away your job.

There are two kinds of Redundancy Pay:

  1. Contractual - in which you will have agreed to contract with your employer over how much redundancy pay you will receive.
  2. Statutory - the amount of pay an employer is legally obliged to provide you with, regardless of any contract.

With Contractual Redundancy Pay the details of how much you receive (and for how long) will obviously depend on the contract between you and your employer. However it is important to note that your employer is legally bound to offer a contract that at least matches the Statutory amount. In other words, a contract for less than the amount you would receive in Statutory Redundancy is not legal. 

When it comes to Statutory Redundancy Pay, the law currently states it must be calculated from your weekly pay, your age, and how long you have worked for your employer.

  • If you are under the age of 22, you are entitled to half a week's pay for each complete year you have worked with that business when you were below the age of 22.
  • If you are aged between 22 and 40, you are entitled to a full week's pay for each complete year of employment when you were aged 22 to 40.
  • If you are over 40 years of age, you are entitled to a week and a half's pay for each complete year worked above the age of 41.

It's important to note that Statutory Redundancy Pay is not awarded for more than 20 years worked. The amount of time worked is calculated from your first day of employment with that company, up to the date when your period of notice comes to an end.

You won't be obligated to pay tax on your Statutory Redundancy Payment, but with a Contractual Redundancy Payment over the Statutory amount, it is highly likely that you will be expected to pay tax on it (certainly if your payment is over £30,000).

If you suspect or encounter an employer who is not willing to pay at least the Statutory Redundancy Payment you are legally entitled to, we strongly advise you to contact the Citizen's Advice Bureau without delay or seek legal advice.

Grounds for Unfair Dismissal

Making a case for unfair dismissal can rest on any number of reasons. Rather than go into a huge list of hypothetical situations here, we believe it is more constructive just to say that if you feel you have a legitimate grievance, contact the Citizen's Advice Bureau or a legal advisor straight away to see if you have a solid case.

If you feel and/or are advised that your employer has selected you for dismissal unfairly, it is imperative that you contact the Employment Tribunal within three months of being notified of your redundancy. Leave it too long and they cannot take the matter any further.

Claim the benefits you are entitled to

When you learn of your redundancy, your first port of call should be your local Job Centre. It's vital you register for the benefits you are entitled to promptly as your claim will take a few weeks at least to process. Ideally you will already be back in work by the time the claim comes through, but it is always prudent to plan for the worst case scenario. Also it's important to note that failure to claim your credited National Insurance contributions might affect your entitlement to state pensions and other benefits.

Manage your Funds

Regardless of the amount of savings you have or the size of your redundancy package, it's wise to quickly put yourself in the mindset of watching how much you spend. Remember that once you secure a new job, it will still be a month until your first salary payment clears, so reducing your normal spending is highly advisable.

Seeking Employment

Having secured your redundancy package and made your claim for the benefits you are entitled to, you should have financial security and a stable foundation from which to seek new employment. Having already visited the Job Centre, you will have had an opportunity to take advantage of their services, but it's a good idea to cast your net far and wide when it comes to seeking a new job.

Dust off your CV and hit the Agencies

Before approaching any recruitment agencies its a good idea to update your CV with your latest references and generally give it a spring clean. A number of CV writing guides can be found on the internet, but its also a good idea to ask any agencies you register with if they think it can be improved at all. The Job Centre can also offer help in this area.

A good overall strategy is to

  • register with all the recruitment agencies you can (and check out online agencies too)
  • grab a selection of papers (both local and national) and study the jobs sections
  • contact friends and old colleagues and let them know you are in need of employment - word of mouth can be an extremely effective medium in job circles
  • show some extra initiative and write to any companies that you feel you would like to work for and that your skill set could complement; even if the businesses you contact have no immediate placements, your details will be kept on file for later.

Stay Positive

If you diligently seek work with enthusiasm and purpose, you will surely gain employment within a short time. If your financial situation gets tight, you may opt to take a short term placement, and keep searching for a more desirable position in your free time once you have some steady income.

Above all, its important to remind yourself to keep your momentum going and stay positive. Redundancy is rarely what we would wish for, but it can be a trigger for a change in your life, which in many cases turns out to be for the best in the end.

Good luck!