This summer, UK unemployment rates have been on the rise. They are up by 38,000 in the three months to June. With 2.49 million already out of a job, the figure looks likely to go up even further as employers seek to cut costs in a time of ongoing economic hardship. All of us, whether we’re in danger of losing our income or not, should make sure we’re getting the best deal possible on our credit cards. In these tough times, there’s simply no reason to pay more interest than you absolutely need to on the debt you have on credit cards.
Many people are facing the threat of losing their job, even those working in the public sector, which until recent times had always been considered safe in comparison to the private sector. So, we all have to face up to the fact that the unthinkable might happen to us. If and when it does, all is not lost as there are certain payments and benefits you may be entitled to. If you’re made redundant, your employer is obliged to allow you to work out your notice, or continue to pay you even if, by agreement, you don’t come into work during this time. This is often referred to as ‘gardening leave’.
Alternatively, you could get pay in lieu of notice. The amount of notice you’re entitled to will be set down in your contract of employment. If you’ve been working on a fixed term contract and this isn’t renewed, you may also be entitled to some compensation for redundancy. Whatever your circumstances, your employer must explain in writing why they are making you redundant and they must meet with you to discuss what’s happening. You’re entitled to have a representative at the meeting, for example a colleague or someone from your trade union. You will also be eligible for redundancy pay, as long as you have worked for the company for a minimum of two years.
Most firms will give at least two weeks’ salary for every complete year of service and many will give more than this. You may need to be prepared to negotiate. However, statutory redundancy pay, which is the minimum companies must pay by law is considerably less. It also depends on your age and weekly pay. Smaller companies are more likely to pay only the minimum they are legally required to. For example, someone under 22 years old will only get half a week’s pay for each year of service, whilst if you’re over 41, the rate is one week plus a half week’s pay for each year of service.
There’s more bad news. With statutory redundancy payments, there’s a limit to how much pay is taken into account. Anything you earn weekly above £400 won’t be included in the calculation. Once you have been made redundant, you will usually be entitled to receive one or more state benefits. Jobseeker’s Allowance is paid to those over 18, but below State Pension age, who are ‘available for, capable of and actively seeking work’. Currently, it is paid at a weekly rate of £67.50 for those aged 25 and over and £53.45 for those 24 and under.
There are other state benefits to which you may be entitled, such as Council Tax Benefit and help with your mortgage interest payments. You can get help and advice at your local Job Centre. If you have taken out an income insurance policy, now is the time to consult your insurers. This could provide you with a valuable extra financial cushion if you lose your job. It may, however, only last for a limited period, typically 12 months. Also, you may have taken out Payment Protection Insurance in conjunction with one or more credit cards or loan agreements. If you lose your job, you could well be able to claim against this to help you continue making payments on your credit cards or other loans.
Note: This post was submitted by moneysupermarket.com representative.
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If you are in the public sector and facing lay-offs, it’s well worth seeing what redundancy packages are on offer and negotiating. A friend has just been made redundant from the Forensic Service which is now being wound up (where forensic evidence in crimes will be examined now I’m really not sure . . .). As she had been working there since graduation ten years ago she was able to settle on a very generous package and can now spend the next two years looking for a job without worrying about bills.
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