What to do if you’ve been made redundant during the cost of living crisis
There’s never a good time to be made redundant, but if it's happened recently, the rising cost of living is probably adding to your worries.
How does redundancy pay work?
If you’ve worked for the same company for at least two years and paid enough National Insurance Contributions, you’ll qualify for ‘statutory redundancy pay’. This the legal minimum you’re entitled to, but always check your contract – you might get more.
Some contracts also offer redundancy pay-outs even if you haven’t worked there for two years or are on a fixed contract.
How to calculate statutory redundancy pay
Our Redundancy pay calculator will work it out for you, plus how long the money is likely to last.
The amount of money you get will depend on:
- your age
- how long you’ve worked for the same employer
- your current salary, up to a certain limit.
Here’s what you should get:
| Your age | Redundancy pay |
|---|---|
|
Under 22 |
Half a week’s pay for each year of service |
|
22 to 40 |
A week’s pay for each year of service |
|
Over 41 |
A week and a half’s pay for each year of service |
Pay in lieu of notice
Your employer could also offer you (or insist that you take) 'pay in lieu of notice' (PILON). This is when you stop working immediately but still get paid for your normal notice period.
When working out your redundancy pay, your employer must calculate how long you have worked for them based on the date at the end of your normal notice period.
Find out more in our guide on Redundancy pay.
How to deal with redundancy
Dealing with redundancy is never easy, but there are many things you can do to relieve some of the initial stress.
Check if you qualify for extra support
As soon as you stop working, it’s a good idea to find out if you're entitled to any extra support.
- Use a benefit calculatorOpens in a new window to check, or contact your local Jobs and Benefits OfficeOpens in a new window if you live in Northern Ireland.
You could get:
- New-Style Jobseeker’s Allowance (JSA) for up to six months, paying:
- £67.20 per week if you’re under 25
- £84.80 per week if you’re 25 or over.
- Universal Credit – the amount depends on your household’s income and savings.
Make a budget
If you don’t have a budget already, use our free and easy-to-use Budget Planner. This can help you understand your financial situation and whether you need to make any changes.
Cut back on unnecessary spending
It’s easy to underestimate how much you spend every month, so you might spot places in your budget where you can cut back.
Even if you’ve received redundancy money, the rising cost of living, including mortgage or rental costs, might mean your redundancy money runs out sooner than you’d like.
Search the job market
While it might seem like there’s a worker shortage, this is only in certain industries. Overall, the number of job vacancies in the UK has been decreasing and unemployment risingOpens in a new window
It’s a good idea to look at the job market for your industry as soon as possible after being made redundant. It can take several months to find a job.
Decide what to do with your pension
There are other money decisions to make, such as replacing lost income, what to do with your workplace pension or making a lump sum pay out work hard for you.
Learn more about redundancy and how to make the right money decisions in our guide Redundancy and losing your job.
What if you’re at risk of redundancy?
The Bank of England is forecasting some challenging years ahead, with a possible recession and rising unemployment rates until 2025Opens in a new window If you’re worried about your job, try to have the tough conversations with your manager soon rather than later.
There may be alternatives to redundancy, like taking on a new role or job sharing.
Find out more in our guide Managing money if your job is at risk.
Redundancy only happens if your job disappears. Your employer needs to be fair about selecting which job roles to remove. If you think you’ve been made redundant for an unfair reason, like taking parental leave or being a union member, you can appeal it.
Our guide Unfair dismissal versus redundancy can help you if you’re in this position.
Voluntary redundancy
Employers sometimes offer voluntary redundancy with a lump-sum payout. This means they can avoid choosing which jobs to remove and which employees to make redundant.
Taking voluntary redundancy might seem like a great idea, particularly if you’re close to retirement or certain that you can find a new job easily.
But before you decide, it’s vital to work out if this would give you enough money to live on. With the rising cost of living, your pay-out won’t last as long as it would a few years ago.
