Being made redundant can be a real challenge for your finances - but with the right help and advice, you can get through it.

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What is redundancy?

'Redundancy' is another way of saying your job no longer exists. This can happen for many reasons - for example, your company might be downsizing, or the type of work you do is no longer needed. Whatever the reason, it can be a worrying situation.

What is redundancy? On the other hand, it can be a good opportunity to make a fresh start. In most cases you should receive some form of redundancy pay, and you can use this to support yourself and your family while you look for another job.

Next: How to deal with redundancy

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How to deal with redundancy

In the meantime, you will need to think about how you are going to make sure you can afford to pay the bills and other living costs.

Plan a budget. Add up all your essential living costs and work out how long your redundancy pay can support you (so if you have £1,800 redundancy pay and your bills and other essentials come to £800, you can support yourself for just over 2 months). Try to ensure you have some money spare for the cost of travelling to job interviews and other emergencies.

If you think you may struggle to pay certain bills, contact the providers and explain your situation. They may agree to a 'payment holiday' until you are back in work. If you're a homeowner, your mortgage lender might agree to reduce your payments to interest-only for a short period.

Claim benefits. You should be entitled to Jobseeker's Allowance (JSA) provided you are actively looking for another job - this will add a reasonable amount to your monthly budget. There may be other benefits you are eligible for, which the Jobcentre can advise you on.

If you're struggling with debt, don't delay getting help. Your first step should be to inform your lenders, who will often be happy to reduce or freeze your payments for a while. If this doesn't help, we can help you find the best way to deal with your debts.

Don't delay looking for another job. It can be tempting to take some time out and live off your redundancy payment, but it's taking a risk.

Spend your free time writing a CV, sending it out to potential employers, signing up for job websites and talking to recruitment agencies.

Many employers will like the fact that you can start working almost immediately.

Find out how we can help you here >

Next: Rights if I'm made redundant

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Rights if I'm made redundant

Rights if I'm made redundant

There are certain procedures your employer must follow when making you redundant. If they don't, they are breaking the law, and your redundancy could be classed as unfair dismissal.

Next: When is redundancy unfair?

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When is redundancy unfair?

In some cases, you may have a reason to believe your redundancy is unfair. If so, your redundancy may not be legal. You can challenge your redundancy and you may even be due further compensation from an employment tribunal.

Discrimination - if you think you have been made redundant because you are being discriminated against, it may be an unfair dismissal. This includes redundancy due to pregnancy, race, religion, gender, age or sexuality.

No obvious reason for your redundancy - for example, if the company has just recruited more people but says it has to reduce its workforce, or if you are the only person to be made redundant.

When is redundancy unfair?You have been at the company longer than others who have kept their job. Employers are allowed to select people for redundancy based on how long they have worked for the company, but it could be viewed as unfair dismissal if you have been singled out despite working there for a long time.

Remember, you should not automatically assume that these are reasons for your redundancy, but if you have any reason to believe your redundancy is unfair then it's worth challenging.

Your local Citizens Advice Bureau can help you >

Next: When is redundancy fair?

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When is redundancy fair?

If your company has no choice but to make people redundant, they are legally allowed to choose people based on things like:

  • Disciplinary records
  • Performance in the job

When is redundancy fair?They can't make you redundant just because they don't like you or prefer other members of staff on a personal level.

Next: Statutory redundancy pay

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Statutory redundancy pay

If you have worked for your employer for two years or more, and you are not self-employed, you will be entitled to some statutory redundancy pay. Statutory redundancy pay is tax-free.

How much you receive will depend on a number of things, including your age, how long you worked there and your salary before you were made redundant.

  • You'll receive half a week's pay for each year of employment completed under the age of 22
  • One week's pay for each year between the ages of 22 and 40
  • 1.5 week's pay per year over the age of 40.
  • This is capped at 20 years of employment, and a maximum of £450 per week.

Statutory redundancy payYour employer may also offer you additional redundancy pay, depending on the situation, but that's up to them.

Get help here >

Next: Employer has gone out of business

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Employer has gone out of business

You are still legally entitled to statutory redundancy pay, and this will usually be part of the company's insolvency plans.

Employer has gone out of businessHowever, if for some reason your employer doesn't pay it, you can make an application to the National Insurance Fund for your redundancy payment.

Next: Mortgage after redundancy

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Mortgage after redundancy

Mortgage after redundancy

If you're a homeowner, redundancy can be especially worrying. You'll probably be wondering how you can afford to keep a roof over your head - but there is help available.

Firstly, remember that paying your mortgage is your top priority, because missing several payments could end with you losing your home.

However, this is the worst-case scenario and there is nearly always something you can do.

In the first instance, contact your mortgage lender to let them know what's going on.

They may agree to a 'mortgage payment holiday' in which your payments are reduced or frozen for a few months, until things get better.

If that doesn't help, it's time to get expert help. Debt Advisory Centre could help you find a debt solution that makes your mortgage payments affordable again.

Find out more here >

Next: Finances after redundancy

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Finances after redundancy

Finances after redundancy

After redundancy it's essential that you stay on top of your finances. Although it will probably be difficult, there are things you can do to make things a bit easier.

Work out a budget based on the redundancy pay you have received, benefits you claim (e.g. Jobseeker's Allowance), savings and any money coming in from elsewhere (e.g. from your partner or friends & family). This will give you an idea of how long you can survive without a job.

Work out where you can cut back. For example, you might have an expensive car that you could do without. You could also cancel things like gym memberships and magazine subscriptions. Switching energy provider, broadband provider and other services can free up some much-needed cash.

Find out what benefits you're entitled to. There may be others on top of your unemployment benefit (Jobseeker's Allowance), depending on your circumstances.

Don't delay looking for another job. Even if you think you can survive for several months without a job, you don't know how long it will take to find something else. There's nothing wrong with taking a week or two to recover, but you should start applying to potential employers and recruitment agencies as soon as possible.

If you find yourself really struggling to manage your debts after redundancy, there is help at hand. Debt Advisory Centre can help you find ways to make unmanageable debts affordable again.

Find out more here >

Next: Dealing with debt after redundancy

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Dealing with debt after redundancy

Redundancy can be very worrying if you already have debts to repay, or if you are pushed into debt as a result. One of the most important things is understanding which debts are top priority.

Priority debts include secured debts (such as your mortgage) and debts that could have particularly serious consequences if they are left unpaid (such as arrears and court fines). Above all you must make sure these debts are paid on time.

Dealing with debt after redundancyNon-priority debts are still important, but the consequences of missed payments are less serious. This includes things like unsecured loans, credit card payments and overdraft debts. You may be able to arrange reduced payments towards these debts, based on what you can afford after your priority debts and essential bills have been covered.

In short, your priority debt repayments can't change, but if you're really struggling you may be able to arrange a more affordable repayment plan for non-priority debts.

You can do this either by contacting your lenders directly, or with the help of a debt management company, which can be useful if you're short on time or don't know how to approach your lenders.

There are a number of different debt solutions available, click on the links below to find out more:

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