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If you are made redundant you may be offered a redundancy package. This will usually include a payment that reflects the amount of time you have worked for the organisation. Depending on how much you receive, it could have an impact on whether you can claim Universal Credit when you leave your job.
You’ll only be entitled to redundancy if you have been an employee of the organisation making you redundant for more than two years.
You may have negotiated a redundancy package when you took the job, if not you will be entitled to statutory redundancy. The amount you receive will then depend on your age and length of service:
The length of service used in the calculation is capped at 20 years, while weekly pay is capped at £538. That means the maximum you could receive is £16,140.
When you are made redundant it is a good idea to check what benefits you are entitled to and how to claim them.
Universal Credit is replacing many of the benefits you may once have been able to claim such as housing benefit and income support. It is the benefit you are most likely to apply for if you are unemployed.
When you apply you will be asked to include all your income and assets such as savings, this includes any redundancy money you have received. The system will then work out how much you are entitled to each month.
If you, and a partner if you have one, have savings of more than £16,000 you will not be able to claim Universal Credit. If you have between £6,000 and £16,000 it could reduce your Universal Credit payments. Any savings below £6,000 will not have an impact. You must declare your redundancy payments when you apply, which may tip you into one of these categories.
If you take on low paid work after being made redundant you can still claim Universal Credit. However it will reduce by 63p for every £1 you earn, unless you have children or cannot work because of illness or disability. In this case your Universal Credit will only reduce once you’ve earned £512 per month if you don’t receive housing support and £292 if you do.
If you are unable to claim Universal Credit because of the amount of savings you have, you may still be able to get some support.
Your savings and partner’s income are not taken into account if you apply for New Style Jobseeker’s Allowance. However to claim this you must have worked regularly as an employee for the past few years and have paid Class 1 National Insurance contributions. You must also be actively looking for work.
If you’re eligible for Universal Credit you can claim both, but payments for Universal Credit will reduce by £1 for every £1 of New Style Jobseeker’s Allowance you receive.
If you have a health condition or disability that limits how much you can work, you may be able to claim New Style Employment and Support Allowance. Again your partner’s income and savings will not be taken into account, but you will need to have made the necessary National Insurance contributions in recent years.
Even if you receive a redundancy payment or are able to claim Universal Credit, you may find you need additional help.
If you have a mortgage, talk to your provider about your situation and ask if they can move you to a cheaper mortgage deal or grant you a mortgage holiday. You can also apply for help to pay your mortgage interest.
If you are finding it hard to keep on top of your outgoings you can get in touch with debt charities for free advice on what steps to take. This could include a debt relief order, debt management plan or an individual voluntary agreement.
In some cases, selling your home could give you the financial security you need to help you through a difficult time.
If you’re considering this option we’d be happy to talk through the service we provide. We can buy your home in just seven days if necessary, which means you’ll quickly have money in your account and your mortgage repayments will stop.
We’re used to dealing with challenging home selling situations. We aim to make the process as hassle-free as possible and keep costs to a minimum. For example, there are no estate agents involved and we organise and pay for solicitors.
If you’d like to chat about how we can help, please get in touch.