Fear losing your job?

Redundancy happens to other people, not to us. Our jobs are as safe as, er, the Bank of England. Maybe they were once, but things have changed pretty drastically over the past four years. And who can be sure that they won’t be hearing those dreaded words: “We’re going to have to let you go” before 2013 is out?

So surely it makes good sense to find out about what could be just around the corner? And, according to the experts, these are the questions that redundancy victims most frequently ask - and the answers that, hopefully, can help them cope.

Why have I been made redundant?

If the business is closing down, then your job has simply gone and no one has selected you for the chop. If, on the other hand, there is a need for less people, a selection will be made from a group of employees using what’s called ‘objective selection criteria’. Those with the lowest scores will be selected for redundancy.

Should I take voluntary redundancy if it’s offered?

A voluntary redundancy payment is often larger than compensation paid to a compulsory redundancy victim, but when the taxman has had his share the volunteer could be worse off.
This is because a payment made to workers resigning voluntarily is generally seen as a ‘golden handshake’ and as such can be subject to tax and national insurance contribution rules. But the taxman is also increasingly challenging the traditional assumption that up to £30,000 can be paid free of tax to anyone made compulsorily redundant.

What is the redundancy procedure?

What usually happens is that you will get a letter about potential redundancy and be asked to attend a consultation meeting to discuss it. You will then be told in writing that you have been made redundant, what your redundancy payment will be and when you will leave. You will have the right to appeal against the decision.

What will happen at the meeting?

Your employer will explain how the situation has arisen and whether there is any alternative available. If it is made clear at a very early stage you will lose your job after more than 51 weeks service, this could possibly be unfair dismissal. The legal purpose of the meeting is to see if redundancy can be avoided and you would be wise to take legal advice.

Can I take someone to the meeting?

You can take a colleague or a trade union representative, regardless of whether you are a member.

Might I get another job in the company?

Your employer must consider offering you another job, even if it pays less. If one is offered, you can take it on a four week trial. If you take it, the redundancy notice will be withdrawn and you will continue in the new role without getting any redundancy payment. If you unreasonably refuse the new job, you can lose the right to a redundancy payment.

What if I think I have been selected unfairly?

Your employer decides the selection criteria, which has to be fair and applied equally to everyone - that’s the law. You should not be chosen for redundancy because of your age or because you have illness or disability. Other cases found to be unfair have involved pregnancy, maternity leave and time off to care for children.

Can I find out what my score was?

You should be told on what basis you have been selected for redundancy and can ask to see the criteria and your scores. You can also ask to see the other candidates’ scores, but your employers can’t be compelled to show you.

I don’t want to be made redundant. Is there anything else I can do?

You have the right to appeal to an employment tribunal if you believe the redundancy was unfair or discriminatory. Such claims must be brought within three months and you need to take legal advice as soon as possible.

Can I insure against redundancy?

You can take out insurance to provide a limited level of financial cover - usually around 50 per cent of income up to £2,000 a month and usually for only 12 months. You can only claim if you have been made redundant involuntarily, not if you resigned, were sacked or knew you were being made redundant when you took the policy out.

I’ve finally accepted redundancy. Can I check I’m being paid the right amount?

When you’ve been made redundant you are entitled to one week’s pay for each year of service up to 12 weeks. You are also entitled to statutory redundancy pay if you have been employed for two years. This is calculated by taking into account your age, length of service and weekly pay. Also, check any contractual entitlements like enhanced redundancy schemes, bonus schemes and share option schemes.

What help can I get?

A growing number of redundancy victims are being helped by a new breed of specialist outplacement counsellors. Their role is to help people get over the shock of losing their jobs, reassess their careers and put them in the best position to find work. And, according to consultants, workers going through this process are likely to land better paid jobs.

What is my tax situation?

The first £30,000 of a payout is traditionally tax free and tax above that is usually deducted at source. Get a P45 tax form from your employer. If you become redundant near the start of the tax year you won’t use up your annual personal allowance, so you should get a refund for every month you don’t work.

The refund will be passed back as reduced tax on your salary if you become re-employed quickly. If not, you will have to fill in a tax return and wait for your money until the end of the tax year.

Should I keep my work pension going?

Affordability may be tricky, but it’s often a good idea to keep up your contributions if you can. If you receive a good redundancy payout, you could think about topping up your pension pot with a lump sum. You can leave the pension where it is, although you may prefer to transfer it to an individual scheme with lower charges. You could also think about moving it into a self invested personal pension where you have more control.

What if the company says it can’t afford a redundancy payment?

If your employer is insolvent or refuses to pay up, you can get paid from the Redundancy Payments office, but this could need an employment tribunal judgement first. Here again, you need sound legal advice.

Can I go for job interviews while working out my notice?

Yes. You are entitled to a reasonable amount of time off to look for a new job, and this includes interviews.

What are the chances of life after redundancy?

Experts say that with the right attitude and good advice, redundancy need not be a disaster. Five out of 10 people lose their jobs at some time in their working lives and most find something new within six months - often better than their previous employment.

“Believe in yourself. If you don’t, no one else will,” says Tim Coleman, who speaks from experience. Made redundant in 2001, it took him over a year to get backing for an executive car hire company.
Today, the firm has 300 cars and employs Tim’s former boss. “I knew I could do it,” Tim says. “After that, it was just the small matter of convincing everyone else.”