Redundancy guide: know your rights and what support is available
As lockdown slowly comes to an end across the UK and employers face changes to the UK Government’s Employer Support Scheme, thousands of people face the risk of redundancy.
The furlough scheme offered a safety net to British workers during the peak of the pandemic, however, as it begins to wind down, firms are now having to make hard decisions about staff numbers with certain industries, such as retail, hospitality and tourism, expected to be the worst affected.
For many people employed in these sectors, the decisions employers are having to make will have life-changing consequences: not only will they lose their employment, but also the income that has come from it, and for many their ability to pay their rent, mortgages, and other bills.
The effects of redundancy, however, are not just financial, and for many can also mean losing important social contact with friends every day.
It is not surprising, therefore, that many describe this aspect of being made redundant, as being another loss in addition to the financial loss they feel.
What should you consider if you’re facing redundancy?
When you are made redundant, the first thing you should consider is whether it has been done fairly.
Fundamentally, being made redundant amounts to dismissal from your employment, as your employment contract is ended.
Your employer must do this fairly and if they do not, then you may have a claim for unfair dismissal.
When selecting an employee for redundancy, an employer cannot use criteria that mean you are selected because of your age, sex or because of you are pregnant or disabled. Instead, they must consider your level of experience and ability to do the job.
Where possible, your employer should consider your ability to do other jobs within the business and consider redeploying you.
Sometimes, where the business in closing altogether, the employer may not use a selection process, as everyone may be losing their job.
What length of the notice must you receive?
When being made redundant your employer must give you at least one weeks’ notice if you have been employed between one and two years.
If you have been employed between two years and 12 years, they must give you one weeks’ notice for each year; and if you have been employed over 12 years, they must give you 12 weeks’ notice.
Contractually, you may be entitled to more notice, depending on your contract of employment.
You must be paid throughout your notice period, in addition to any Statutory Redundancy pay that you are entitled to.
Statutory Redundancy Pay (SRP)
When you are made redundant and you have been working with your employer for more than two years, your employer will have to pay you Statutory Redundancy Pay. Everyone who has been employed for more than two years is entitled to this, but sometimes, you may be entitled to more because of your contract of employment. To check this, you should check your contract of employment.
How much SRP you are entitled to depends on your age, but if you are under 22 years of age, you should get a half weeks’ pay for each full year you worked when you were under 22; where you are 22 or over, but under 41 years of age, you should receive one week’s wage for each full year you worked. Where you are over 41 years of age, it is 1.5 week’s wage for every full year.
Statutory Redundancy Pay is paid for a maximum of 20 years’ service.
This is in addition to the pay you are entitled to throughout your redundancy notice period.
How will you keep your financial commitments?
Making ends meet is usually the biggest concern people will have when they are being made redundant.
Mortgages still must be paid, as do other household bills and any credit cards and other finance agreements you have.
Obviously, the easiest way to do this is to find another job, but in times of economic downturn, this will not always be easy or something that can be achieved immediately.
Hard decisions, therefore, may have to be made about what you can and cannot afford.
Establish a budget
The first thing you should do is create a budget and you can use our budget calculator to do this.
This can help establish what your income is coming in and what expenditure you have going out.
You then need to prioritise your expenditure, so things like your mortgage/rent, gas and electricity are priorities, as is your current council tax bill and your TV Licence.
Other, expenditures, like credit cards, however, are not priorities, if hard decisions have to be made.
These only should be paid when all your other essentials are paid.
Where this is not possible, you should seek advice from an expert money advisor who can offer support and guidance to ensure you don’t get stung by high interest and late-payment fees
If you’re worried about redundancy and your finances speak to a Creditfix money advisor. Our expert team is on hand to offer help tailored to your circumstances. Call 0800 0431 431 today.