Redundancy can cause a lot of stress and uncertainty, especially when it comes to your finances. Whether it's your job or that of someone close to you that's been affected, you'll need to get to grips with your financial situation as quickly as possible.
There's never a good time to be made redundant. For many, it will mean your financial situation will change. The best way to prepare yourself is to get a good understanding of your finances as quickly as possible. You can do that in a few simple steps:
First and foremost, don't ignore the problem.
Spend some time calculating your income and outgoings so you can prioritise important commitments. You should pay all your essential bills first, such as your mortgage, utility bills (electricity, gas, water), insurances, council tax and housekeeping.
Know your rights. As an employee of any company, you have some basic rights to information and a say in what happens to you. There's a range of things you should find out such as notice periods, redundancy pay and legal requirements.
Get some practical help. Understanding your complete financial situation is key to solving any problems you may be experiencing. Your bank is a useful place to seek guidance and support.
Budget, budget, budget. Cutting costs will relieve some of the financial problems you may face. An easy and simple way to do this is to draw up a budget.
If you think you may struggle to pay your mortgage, call your mortgage provider right away. They'll be able to offer advice - the earlier you contact them, the better.
Find out what you're entitled to. There are various allowances you can claim to tide you over while you look for another job.
Dealing with your employer
If you're going to be made redundant from your job, you should be treated fairly by your employer and there are certain steps they would be expected to follow. You may also be entitled to a redundancy payment. In addition, your employer could still be a valuable source of information about such things as health care, the company car, company loans, redundancy payments, time off for interviews, pensions etc. You need to ensure you have all the relevant facts to hand in order to start planning your future and your return to work.
Make sure you know:
Your date of redundancy.
The date you'll receive any redundancy package.
What the package offers and how it's been calculated.
What will happen to your pension.
If you can take time off for interviews for new jobs while you are still employed by your current employer.
If you'll get any help with finding and applying for jobs, for example, use of telephone, computers, photocopying, etc.
If your employer will help with any form of re-training.
If your employer will supply you with a reference.
How long will you have use of any other benefits, such as a company car.
If you're struggling with your financial commitments, you should pay all your essential bills first, such as your mortgage, utility bills (electricity, gas, water), insurance, council tax and also housekeeping. You should make sure that you pay these bills before making any payments towards credit cards or loans.
In addition, you should:
Check whether you can get any state benefits or tax credits that could help to increase your income.
If you have an insurance policy, such as income protection insurance or mortgage payment protection insurance, check whether this could help with your payments.
Seek debt advice, such as from the Citizens Advice Bureau, if you would like help managing your finances.
Make sure you keep all joint mortgage holders, as well as anyone acting as a guarantor on your mortgage, up to date with what is happening.
Get in touch with creditors early and make them aware of your situation. Find out how you can set up payment plans.
Get some practical help sorting out your finances
Understanding your financial situation fully is key to solving any problems you may be experiencing. Your bank or building society is a useful place to seek guidance and support.
A common mistake people can make is to leave contacting their lender until the situation becomes critical, which reduces the number of options available to them. Letting your lender know early on that you may struggle to make any payments to them because of a change in your circumstances is the first step. There are many things that lenders can do to help you manage your situation so don't be afraid to get in touch with them.
Your bank or building society should be able to provide you with help and guidance if you're experiencing financial difficulties or just want to talk about your financial situation. They can give you a range of practical tools to help review your financial situation and decide what you can do next.
Quick ways to cut costs
There are a number of ways to reduce your outgoings quickly. Here are some suggestions:
Switch to cheaper utilities
See if there are cheaper options for your gas and electricity service. Also, check whether your utility companies offer discounted rates for payment by Direct Debit.
Check your tax payments and benefits
Sometimes when you're working you can end up paying too much income tax. You should also make sure you claim for any benefits to which you're entitled.
Trim mobile bills
It's easy to waste money on mobile phone tariffs that don't meet your actual needs. You could think about a 'pay as you go' deal, so you can't run up a large bill without realising, and you won't be locked into a 12 or 18 month deal.
Use comparison websites to make sure you get the best deal on various types of insurance.
Although being made redundant can be a shock, you must act quickly to ensure you get back out into the job market as soon as possible and that you start receiving the benefits to which you're entitled to.
Employment Service, Job Centre and Benefits Agency
On the first day you become unemployed, call in to your nearest Employment Service Job Centre to make an appointment for a New Jobseekers' Interview. It's important to do this right away in order to register for the Jobseekers' Allowance and to get credit for National Insurance contributions because these allowances won't be backdated if you delay your registration.
You'll be given a claim pack to complete and bring to the interview. You must answer all the questions that apply to you. Jobseekers' Allowance is only paid for the periods that you're unemployed and actively seeking work. It begins once the period covered by any payment in lieu of notice has expired. You will normally have a three day waiting period at the start of the claim for which you will not receive benefit.
Remember to take your National Insurance number when you go to make your appointment. This may be on your pay slip but can be found on a P45 (Tax Form) or P60 (Certificate of Pay, Tax Deductions and National Insurance contributions).
When you go to the interview, take your P45 (if you've received it) and any letters issued by your former employer in connection with the termination of your employment. If you are claiming for a partner, you will have to provide their National Insurance number, as well.
Your local Job Centre can offer a valuable service in determining the suitability of vacancies, background of companies and other schemes for training. Make contact with the Job Centre as soon as possible and establish which training courses and schemes may be available.
Newspapers and magazine advertising
It is a good idea to use trade magazines as well as local and national newspapers when looking for a particular type of job. When you're scanning pages of adverts, it's really important to read the text thoroughly to make sure you understand what the job entails, what is on offer and what you must do next.
Recruitment or employment agencies are firmly established in the job market to provide a service to either organisations looking for staff or individuals looking for a new position.
You may well see agencies advertising in the newspapers on behalf of a specific company. The agency will then screen all applications and perhaps hold an initial interview with suitable candidates before a final shortlist is drawn up for submission to the company.
Many agencies focus on specific areas of industry while others offer a whole range of jobs. You may be able to get some cross training - for example, agencies specialising in administrative and secretarial work may be able to offer you training on up-to-date word-processing/computer packages. There are some agencies that deal specifically with mature people.
Due to the number of clients that agencies may have on their books, it is advisable for you to keep in regular contact with them. That way, your name will be front of mind whenever any suitable positions arise. To find a listing of employment/recruitment agencies, look in the Yellow Pages or search online.
And while you're looking for a job…
Find out what you're entitled to. There are various allowances you may be entitled to, to help you get through your redundancy.
To help you along financially, you can claim for Jobseekers' Allowance while you're looking for a new job. But you must satisfy the following points:
Be unemployed or working less than 16 hours per week on average.
Have paid enough National Insurance contributions to receive contribution-based Jobseekers' Allowance or have income or savings below certain levels for income-based Jobseekers' Allowance.
Be available for, capable of and actively seeking work.
Have a Jobseekers' Agreement that is signed by you and an Employment Service Advisor.
Jobseekers' Allowance and pensions
You can receive an occupational or personal pension and still claim contribution-based Jobseekers' Allowance but your claim may be affected depending on the amount of pension received. This is regardless of your age. Occupational or personal pensions will be taken fully into account if income-based Jobseekers' Allowance is claimed.
There are other benefits available through the Benefits Agency that may be appropriate to you and your family. These will depend on your personal circumstances and whether you are in work or unemployed. Get in touch with your local Employment Service Jobcentre or Benefits Agency to find out.
The FCA regulates the financial services industry in the UK. It's consumer helpline offers impartial information and general guidance. You can call the FCA's consumer helpline on
0800 111 6768 , between 8am and 6pm Monday to Friday, or Text Relay (previously Typetalk) on 18001 0800 111 6768 . For more information and impartial advice on how to make the most of your money visit the Money Advice Service website: https://www.moneyadviceservice.org.uk/en.
This is a national telephone helpline for people struggling with debt. National Debtline can also send you a free debt advice pack, with guidance on completing a personal budget, samples of letters to creditors, and information on legal questions connected with debt.
Call National Debtline on 0808 808 4000 , 9am to 9pm Monday to Friday and 9:30am to 1pm Saturday or go to www.nationaldebtline.co.uk.
This is a network that supports free advice providers and can give details of your nearest debt advice centre. Call adviceUK on 0300 777 0107 , 8:30am to 5pm Monday to Friday.
Run by the government, this website provides a wide range of news and information and has a specific section on redundancy. Visit: Gov.uk.
Your local council
Many local authorities offer debt advice services. To call and check with yours, look under 'Local Government' in the phone book.