Losing your job can feel like a catastrophe. Being called in to your boss’s office to be told that your services are no longer required is a major life-changing event which can leave you feeling depressed and hopeless.
But the choices you make immediately and the action that you put in place the moment that you are let go can make the difference between getting back on your feet fast or languishing at home feeling lost and without a role.
What is redundancy?
There is a major difference between being fired and being made redundant. Being fired generally means losing your job because you have done something wrong, not met your employer’s expectations or been found guilty of misconduct in your job. When you are fired, there is generally not a financial compensation package.
Being made redundant is what happens when your job no longer exists or is to be phased out. This could be because of staff cutbacks, the business is being scaled down or reoriented, a merger or a technological advance means that your job can now be done by computers or robots.
When you are made redundant, it’s generally not because of anything you have or haven’t done but because of circumstances beyond your control.
What you should do immediately
When you are told that you are not needed any more, the temptation may be to vent your anger at your boss and walk out immediately. But while this might give you a few minutes of satisfaction, you need to be slow down and think about the longer term. Try to stay calm and professional in all of your dealings with your boss and employer. Make every effort you can to remain on good terms with your boss, particularly if you are being made redundant because of economic considerations – you’ll want a good reference from your employer and to maintain a good relationship should things change in the future when your boss might consider reemploying you.
Before you do leave, make sure that you have the following:
Your P45 (you will need this for a future employer and any dealings with HMRC)
Full details of your compensation package including a statement showing how your benefits have been calculated and information on your pension rights. You’ll normally be entitled to statutory redundancy pay if you’re an employee and you’ve been working for your current employer for two years or more.
By law, you’re entitled to half a week’s pay for each full year you employed at the business under the age of 22; one week’s pay for each full year you were 22 or older, but under 41; one and half week’s pay for each full year you were 41 or older. The length of service is capped at 20 years and if you were made redundant on or after April 6, 2016, your weekly pay is capped at £479 and the maximum statutory redundancy pay you can get is £14,370. If you were made redundant before 6 April 2016, these amounts will be lower.
However, many employers will have their own redundancy arrangements which will be more generous than the legal minimum. One good thing about redundancy is that you won’t pay tax on the first £30,000 of your compensation package although other benefits (like cars or medical insurance) will be taxable.
What you should do next
Don’t hide it: There’s no shame in losing your job and you’re going to need the emotional support of your friends and family. It’s very likely that somebody close to you has been through redundancy and will be able to offer you some useful tips on how to get back on your feet.
Sign on: Don’t let pride get in the way of benefits. You should sign on for Jobseekers Allowance particularly when you may underestimate how long it can take to find another suitable job – this could be as long as six months.
Make a budget: You’ve probably got a lump sum sitting in the bank after being made redundant. This may have to last you a while so learn how to make a household budget and eke your redundancy pay out. Don’t go crazy and book a round-the-world cruise.
Set up a daily and weekly schedule: You are going to need to stay motivated and maintain your self-confidence. This doesn’t mean trawling the job sites for eight hours a day but to introduce some structure to your days including set periods for looking for a new job, a fitness regime which can help stave off depression, hobbies and quality time with your family. You are more likely to make a good impression with a new employer if you are fit, happy and project a positive attitude.
Oliver Jones has written for Solution Loans since 2015. His passion for personal finance comes through in the 150+ blog posts he's written since that time. His talent for explaining all things money means he's covered topics as diverse as...Read more about Oliver Jones