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Financial support if you are made redundant

Fri 12 June 2020

Financial support if you are made redundant

Unfortunately, no job is completely secure. Even businesses with a long history of success can be struck by unforeseen circumstances that mean jobs have to be cut. However, the 2020 global pandemic has meant that job security feels even more unstable than usual for many people.

So, what happens if you do lose your job? Can you get financial support if you are made redundant? 

Redundancy pay

If you have been with your employer for longer than two years, then you automatically qualify for statutory redundancy pay. If you have been there for less than two years, you might not be entitled to any compensation, its down to the individual employer. 

The amount you receive is based on your length of service and your age. You can receive up to £30,000 tax-free as a redundancy payment, and this is not subject to NI. 

Your employer must give you notice of redundancy and explain the process and the amount of redundancy pay you can expect. The minimum notice is one week, and you will receive pay for that week, regardless of whether you are expected to work or not. If you are owed any holiday pay, this should also be added to your final wage. Your redundancy pay might be paid separately. 

If your employer has gone out of business, you can still claim statutory pay through the Redundancy Payments Service

Benefits you can claim if you have been made redundant

Most types of benefits have now been replaced by Universal Credit. You may be entitled to Universal Credit if you have been made redundant; you can check your eligibility and apply via the Government website or through your local Jobcentre. If you get a new job while claiming Universal Credit, make sure you report a change of circumstances or you could be fined.  

You may also be entitled to Jobseekers Allowance or Employment Support Allowance depending on your circumstances. Your local Jobcentre will be able to help you work out which benefits you can claim. 

If your Universal Credit does not cover your mortgage or bills, you may be able to apply for a mortgage holiday or payment holiday. This allows you to take a break for three months without incurring additional charges. However, during the payment holiday, the amount you owe does not get reduced and you will still be charged additional interest, so you should think carefully about whether this is the right option. 

Many companies are also offering payment holidays for overdrafts, loans and credit cards to anyone who has been financially impacted by COVID-19, so it’s worth doing a bit of research or speaking to your lender. 

Getting a new job

If you are made redundant, you’ll probably want to secure a new job as soon as possible. Here are some tips for finding opportunities:

  • Update your CV and send to local recruitment agencies
  • Check online job boards
  • Ask your friends, family and contacts if they know of any job opportunities
  • Use sites such as LinkedIn to build contacts and find jobs within your industry  
  • Visit your local Jobcentre to find out whether you can access any free training

Try to remain positive even if you don’t hear back straight away. Job hunting can take a bit of time so while you are waiting on replies, look for free online courses that will help you brush up your skills.

About Morses Club

At Morses Club, we understand that feeling out of control when it comes to money can be tough. We offer small cash loans to help with those unexpected situations. Our loans aren’t right for everyone, and you should only borrow what you can afford to pay back. If you would like to find out if a Morses Club cash loan is right for you, then read our FAQs for more information. 

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