Losing your job through redundancy can be one of the most stressful moments in your professional career. Throughout lockdown, redundancies were not uncommon to witness with the pandemic causing uncertainty and panic throughout companies across the world – proving particularly challenging for new and small businesses.
s1jobs is here to help with some of the most burning questions surrounding redundancy; what it really means and what you’re entitled to. Read on to explore our guide on what steps to take next.
What is redundancy and what does it mean?
In simplest terms, redundancy refers to a form of dismissal from your job. It typically occurs when employers need to decrease their workforce. This is either due to a position no longer being necessary or because the company can no longer afford to keep individuals employed.
What is the difference between voluntary redundancy & forced redundancy?
Voluntary redundancy occurs when an employee voluntarily accepts a package. However, if an employee is selected for redundancy, then it is referred to as forced redundancy (also known as ‘compulsory redundancy’). Regardless of the type of redundancy, there are still processes and procedures in place that organisations must follow when making any employees redundant.
Learn more about the legalities involved with actioning a forced redundancy as an employer.
As an employer, you may end up paying more money to employees being made redundant, however, the overall process will be shorter thus, you will spend less time paying back employees’ basic wages.
An important aspect of redundancy to consider from an employers’ point of view, is the morale impact that will come from a forced redundancy. Inevitably, if an employee leaves on their terms, then morale will be less affected. Whereas, a forced redundancy will not only impact the employee in question but may create uncertainty and stress amongst other employees, if one of their colleagues has been made redundant against their will.
What are your rights and entitlements?
If you or a loved one has been made redundant, it’s vital you check what rights you have and what money you are entitled to from your employer.
There are typically two different types of redundancy pay you could be entitled to: ‘statutory’ redundancy pay or ‘contractual’ redundancy pay. Statutory redundancy pay refers to payment that the law says you’re entitled to. If you’ve been with your current employer for 2 years or more, you’ll typically be entitled to ‘statutory redundancy pay’. Meanwhile, contractual redundancy pay refers to extra money that your contract states you can claim in addition to the statutory pay.
There are some cases where you won’t be entitled to statutory redundancy pay, including:
- If you’ve been employed for less than 2 years
- You’re self-employed
- You are a police officer or in the armed forces
Read further about other situations where you won’t be entitled.
If you aren’t entitled to statutory pay, it’s possible you’re still able to receive contractual pay. Take a look at your contract to see what your specific entitlements are.
If you’re entitled to statutory redundancy pay, there is still a chance you could lose that right for several reasons, including:
- You’ve turned down an alternative position offered by your employer without justification
- Leaving before the contract has finished e.g. finding new work
- Are fired due to gross misconduct before the end of your contract
Read our quick guide to your financial options for post-redundancy.
How much redundancy pay you will get? How redundancy is calculated
How much statutory pay you receive will be determined by a few factors (Source: Gov.UK). For each full year that you’ve worked for your employer, you’ll receive:
- Up to age 22: Half a week’s pay
- 22 – 40 years old: 1 week’s pay
- Over 41 years old: 1.5 week’s pay
Important things to note about statutory pay
- Statutory pay is capped at 20 years (for example, if you’ve worked for your employer for 27 years, you’ll only be entitled to 20 years of redundancy pay)
- You don’t pay tax on your statutory redundancy pay
- If you turned 22 or 41 years old while working under your employer, you’ll only be entitled to the higher rates for the full years that were over 22 or 41
- The maximum weekly amount of redundancy pay you can receive is £571 – regardless of if you earn more per week
- Your weekly pay refers to the amount earned over the 3 months leading up to the redundancy.
People who were made redundant throughout the pandemic were often paid less because they were on furlough. In this case, your redundancy pay is based on what you would have typically earned.
See the Gov UK website to calculate how much redundancy pay you’re owed.
How do you find a new job after a redundancy? How to talk about redundancy in job applications and at interviews
Searching for a new job after you’ve been made redundant naturally comes with many challenges and apprehensions. One of the biggest concerns is how your employment gap will look to future employers. Many employees who have been made redundant worry that this gap will appear as though they’ve lost their job due to gross misconduct instead of the reality, which could be as simple as budget cuts.
We understand that addressing this during the application or interview process can be daunting, however, it’s important to remain honest. Take advantage of your cover letter, which is your chance to expand on your work experience and reasoning why you want the job you’re applying for. Be honest about the gap in your employment and shed some light on it, rather than avoiding the subject.
Take a read over our other tips on how to best address the conversation of redundancy during these hiring moments.
It’s easy to feel under-appreciated and demotivated after being made redundant but try to remind yourself that it is not a reflection of your character or performance and try your best to view this moment in your life as an opportunity to explore new avenues.
Your cover letter gives you the chance to expand on your CV so you should use it to give some context for the gap in your employment. Space on a cover letter is limited and you want the main focus to be what you can offer so just a brief explanation will do.
At s1jobs, we have thousands of exciting, unique vacancies with some of Scotland’s top employers. Take a look for yourself.
