What to do when you're facing redundancy
Although losing your job can be devastating, it's important to keep a clear head, and take some easy steps to manage your money and sort your finances.
Firstly, make sure you know your rights. If your employer puts you on the redundancy list, check that you’re being treated fairly. By law, they should talk to you about it beforehand and give you notice (or pay in lieu of notice). You can ask if you can take an alternative role or work part-time instead. Your employer must use a fair way of selecting job roles to make redundant and tell you what it is. You also may have the right to paid-time off work for training or to look for a new job. Talk to your employer about it.
If you’ve worked for your employer for at least two years, you’re entitled to statutory redundancy pay. This is the legal minimum that your employer will need to pay, unless it has gone out of business. If that’s the case, you can apply to the National Insurance Fund for a direct payment. How much you’ll get depends on a number of factors, like your age, how long you’ve worked for your employer and how much you earn. Some employers are more generous – check your contract. And the good news is the first £30,000 is non-taxable but holiday pay and bonuses might be.
Your income will be lower following redundancy. And the bills will keep rolling in. If you don’t already have a budget, it’s time to create one. Be honest with yourself about what you’re spending. Write down all your income and expenses. Already got a budget? Use our budget calculator to relook at it and see how you could be affected if you lost your job. Could you live on less each month?
Look at all your expenses. Are there any non-essential things you can cut back on like magazine subscriptions or daily lattes? If you’re still working, cutting back can help you build up a savings buffer to help you get by if you do lose your job. Do you already have savings that you can access easily? Next, look at monthly bills for items that can be trimmed without affecting your lifestyle. Transfer to better value utility providers and shop around for cheaper insurance using price comparison websites.
Still working? Pay off as much as you can (but look out for early repayment charges). If you’ve been made redundant, speak to lenders about reducing payment on any debts, especially your mortgage lender. Because you risk losing your home if you don’t keep up your repayments. Don’t stop paying without speaking to your providers first. Many lenders are sympathetic and will talk to you about how you can cope while you get back on your feet and what your options are.
Once unemployed are you entitled to state benefits like job seeker’s allowance or income support? Speak to your local job centre or Citizens Advice Bureau to find out. If you’re eligible, you might also be able to get a discount on your council tax, help with paying rent or tax credits. Do you have any protection policies that you might be able to claim, like Payment Protection Insurance or Income Protection? And think about other ways that you could make money. Renting out a spare room is a good way to bring in extra cash. Just remember to get permission from your landlord or mortgage provider and update your insurance policies.
Make a redundancy plan and more
Money Advice Service
Know your rights when facing redundancy
Free, confidential advice on your employment rights
Acas (the Advisory, Conciliation and Arbitration Service)
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