Tips For Coping With Redundancy

Your P45 is in the post

A recent survey by the TUC suggests that 13% of workers (over 3 million in total) are worried about the threat of redundancy – hardly surprising given all the talk about recession and the current state of the economy.

It’s unlikely that many people will be made redundant, and whilst I wouldn’t wish redundancy on anyone who wasn’t prepared for it, it shouldn’t always be seen as a bad thing.

Here’s a positive article about someone who was made redundant back in 1991, yet made the most of her redundancy money and used her new-found freedom to setup her own company – which turned over a whopping £75million last year.

Now, in this case, the lady in question had been earning £30,000 per year when she was made redundant, and so she was probably in a better situation when her P45 arrived than most would be, but the point I’m trying to make is that she turned a possibly bad situation into a good one.

Whilst it’s probably not the case for everyone, for some, redundancy can be used as a kick up the behind to get out of a job that they may be comfortable with but feel they could be doing more, or could be used to start something completely new, such as finding a job in a different industry or setting up your own business doing something you really enjoy.

It obviously helps if you’re prepared, so here are some tips for coping should that P45 arrive.

Tips For Coping With Redundancy

  • Have an emergency fund – although this is a luxury for many, with over a third of people only able to last a maximum of 11 days until they ran out of money, if you can save a few months salary you’ll give yourself time to look for a new job. Many suggest a minimum of 3 months salary, but obviously the more the merrier. It’s worth taking into account how easy you think it would be to get a similar job if you want to maintain your income. If possible, get the money into a high interest, easy access account.
  • Check your redundancy payout – ask your employer or check your contract for details on how much you would be likely to get if you were made redundant. You are entitled to redundancy pay if you’ve worked for your employer for over 2 years. If you’re lucky, your company will offer you a reasonable payout above the statutory redundancy pay (up to £30,000 is tax free!) – if not, use this calculator to work out how much statutory pay you could be entitled to.
  • Insure against redundancy – it’s possible to take out Accident, Sickness and Unemployment (ASU) cover which will pay out monthly to cover your mortgage and other household bills – for example, the Post Office’s “Lifestyle Protection” will payout £1,000 per month for a year if you pay a monthly premium of £45. I’m not sure how this compares to other plans, so shop around before committing yourself. Be aware though, if there’s any suggestion from your company that there may be redundancies on the cards, taking out an ASU policy is likely to be a waste of time.
  • Have a plan for the future – you could treat redundancy as a blank canvas as I’ve suggested above, but it’s important to think carefully about what you’d do if you found yourself without a job. Depending on what your financial situation is, you may have to find any job quickly to ensure you at least have some money coming in, or if you’ve prepared financially, you may have a few months to make your decision.

As you can see, redundancy doesn’t have to be a major disaster given a little planning. What would be your tips for coping with redundancy? Leave your thoughts in the comments below.

Creative Commons License photo credit: waffler

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