Fastest growing Recruitment Membership Body Join Britain's Institute of Recruiters (IOR)

7 steps to help you protect yourself if you face redundancy

One in three UK workers fears losing their job, according to research from technology firm CEB

HR practice leader at CEB, Brian Kropp, said the unpredictability of Brexit negotiations and the forecast of a slowdown in business is ‘weighing heavy on the workforce and causing a breakdown in trust and confidence’.

‘Understandably, employees are nervous about their future and their career prospects,’ he said.

Figures revealed by the Office for National Statistics show that some companies are reducing job availability with employment falling by 6,000 in October 2016 to 31.76 million, its first drop in a year, knocking the overall employment rate down from its record high of 74.5 per cent, to 74.4 per cent.

Preparing for job loss on an already stretched budget is a tough path to have to travel.  Putting aside money each month to cushion the blow is harsh in reality and in some cases nearly impossible to achieve.

Sarah Davidson from This is Money details 7 steps you can take to protect your income and family should you face losing your job.

  1. Work out your redundancy pay

The most obvious step to take of course – check your entitlement for statutory or contractual redundancy pay. This will enable you to work out your basic income and to plan ahead for any shortfall.

Statutory redundancy pay is paid by the government if you’ve worked for your employer for two years or more. What you get will depend on your salary and your length of service, and is given to you tax-free.

Contractual redundancy pay is paid by your employer. Their redundancy policy should be explained in the staff handbook, intranet or contract. Tax will be deducted automatically for amounts over £30,000.

  1. Check your contract for your notice period 

If you’ve been employed for less than two years then you should be given at least one week’s notice. If you’ve been employed for two years or more you should receive one week for every year of employment, up to a maximum of 12 weeks. You may also get a contractual notice which could be longer.

  1. Review your monthly outgoings 

Tally up your monthly outgoings and any upcoming expenses.  If you do receive redundancy pay then assess how long this will help to meet these costs until you find work again.

  1. Review your final payslip 

Your final pay will include your wages, any redundancy pay and potentially holiday pay. You may also receive ‘pay in lieu’ if you don’t work your full notice. If you think you’ve been underpaid, contact your employer to correct it.

  1. Do you have any insurance policies? 

If you’ve taken out an income protection or mortgage protection policy for example, check the terms and conditions. You may be able to make a claim.

  1. Check to see if you are entitled to any benefits

While job seeking, you may be entitled to benefits such as Housing Benefit or Jobseeker’s Allowance. Using the Citizens Advice’s benefit checker can help.

  1. Reduce your bills

You may be able to make savings on your bills – you could save an average of £300 on your energy bill by changing tariffs or suppliers if you haven’t for some time. Do an online comparison to see whether you can receive lower tariffs.

Many mortgage lenders will also allow you to take a temporary payment holiday if you contact them early to discuss your options – some will even let you skip a few payments to give you a bit of breathing room while you find your feet again. It’s important to speak to them as early as possible so they can decide how best they may be able to help you.

Citizens Advice is a great place to start if you require assistance with saving money, prioritising any bills and debts you have, and they can also help you to negotiate with any companies you owe money to by creating more affordable repayment plans.

Employment expert at Citizens Advice, Tracey Moss, said: ‘If you’re facing redundancy, it’s important to assess your financial situation so you can plan for the coming months.

‘Work out what your redundancy pay will be and look at how much you spend each month on essential bills – like your rent or mortgage, gas and electricity bills.

‘That way you’ll know how long your redundancy pay will tide you over if you don’t have savings to fall back on. You can also look for other sources of income while you’re job hunting, whether that’s using an insurance policy that you’ve taken out or checking for any benefits you can claim.

‘If you’ve worked out what income you’ll have and you’re concerned that you won’t be able to pay your bills, seek advice as soon as possible.’

If you’re just looking for peace of mind

Director of protection insurance firm Drewberry, Tom Conner, says that during the last recession redundancy insurance became an extremely popular policy as workers tried to mitigate the financial risks of losing their job.

‘Unfortunately, many people didn’t start looking for this cover until their company had already announced redundancies, at which point it is too late to take out cover with most providers,’ he warns.

‘If you know there is a real possibility of being made redundant then great care is needed when looking for unemployment plans.’

‘If there are rumours of redundancies at your place of work and you are at all unsure if you would be eligible, speak to an adviser who can confirm the eligibility criteria with each insurer to see if it’s still possible to take out cover,’ advises Conner.

‘Even better still, if you’re worried about redundancy take out cover before it gets to that stage.’

Research from insurer Liverpool Victoria, has found that a third of UK parents would have to rely on welfare and State benefits if the main breadwinner in their household couldn’t work, while one in five would have to borrow money from friends or family.

A further 3.2 million couples in the UK rely on both incomes to make ends meet each month.

‘Very few households would be able to cope if the main breadwinner was out of work, but the overwhelming majority of people don’t have any protection insurance in place or fully understand how it can help them,’ said Harper.

Join Over 40,000 Recruiters. Get our latest articles weekly, all FREE – SEND ME ARTICLES

Recruiters love this COMPLETE set of Accredited Recruitment & HR Training – View Training Brochure

Comment on this story

Your email address will not be published. Required fields are marked *

*

Join the BIoR to be part of creating excellence in recruiting standards & service