Redundancy rights – your job loss questions answered including holiday and maternity pay and benefits
THOUSANDS of people in the UK are set to lose their jobs after a raft of companies announced 12,000 cuts in one day this week.
The redundancies are mainly being made by high street retailers and in aviation – two of the sectors hardest hit by the coronavirus lockdown.
Upper Crust owner SSP Group, Harrods, Airbus and EasyJet have all announced layoffs in recent days.
And that could just be the tip of the iceberg as the full impact of the coronavirus lockdown hits the UK jobs market.
But what are your rights if you are made redundant?
How much redundancy pay will I get?
If you have worked for your employer for two years or more, you are entitled to statutory redundancy pay.
This is based on your age, weekly pay and number of years in the job.
The maximum amount of statutory redundancy pay is £16,140, or £16,800 in Northern Ireland.
The government has a calculator on its website to help you work out how much you are owed.
You can’t get less than the statutory amount but you may get more if your employer has a redundancy scheme, and redundancy pay up to £30,000 is tax-free.
Will I get holiday pay?
When you are made redundant, you are also entitled to any holiday pay you are owed for untaken holiday days.
However, if you have taken more days than your annual entitlement then your employer is within their legal rights to dock this from your final pay settlement.
Will I get help with my mortgage or rent?
If you are made redundant you won’t automatically get help with your mortgage or rent – but there are steps you can take.
If you are struggling to pay your mortgage, talk to your lender to see if it will help you manage your payments.
Lenders must only use repossession as a last resort and have to prove they have done all they can to help struggling borrowers.
At the moment, repossessions are banned until the end of October.
Will a payment holiday affect your chances of getting a new mortgage?
IT'S up to individual lenders to decide whether or not they take into account a coronavirus payment holiday when considering a mortgage application.
Although they can’t see a payment break on your credit score, they may use other methods such as Open Banking where it will show up.
Here’s what the banks have said they will do, according to MoneySavingExpert:
- Barclays
Barclays has said that it won’t necessarily use information of a payment holiday due to the pandemic when assessing a new mortgage application.
For example, a payment holiday with another lender won’t have an impact on your mortgage application.
- Bank of Scotland, Halifax and Lloyds
All three banks are owned by Lloyds Banking Group. They’ve said that it will take payment breaks into consideration when deciding whether to lend to you, even if you took it out due to the coronavirus crisis.
- NatWest and RBS
Both are part of the same banking group, Royal Bank of Scotland. The policy here is that a coronavirus payment break would be considered but having one itself wouldn’t prevent someone from being approved a new mortgage.
You can also ask your bank for a three month mortgage holiday.
The payment freeze has been pushed until October 31 this year, and we’ve created a guide of how to apply for one here.
Similarly if you think you won’t be able to pay your rent, it is best to talk to your landlord up front.
You might be able to claim Universal Credit housing costs or housing benefit to help pay your rent.
Will I still get maternity pay?
If you are made redundant and your employment ends in or after your “qualifying week”, which is the 15th week before the week your baby is due, you are still entitled to statutory maternity pay for 39 weeks as usual.
You will not get statutory maternity pay if you are made redundant and your job ends before the “qualifying week”.
However, you may be able to claim maternity allowance, which you can do at your local Job Centre.
If you are already on maternity leave and receiving statutory maternity pay when you are made redundant, your maternity leave will come to an end when your employment ends but you will continue to receive your statutory maternity pay for the rest of the 39 week period.
Keep in mind that employers cannot select a woman for redundancy purely because she is pregnant or on maternity leave – this would be unfair dismissal.
When can I apply for benefits or Universal Credit?
It is a good idea to sign up for Universal Credit as soon as you have confirmation of your redundancy – the money is intended to help with your living costs.
If you have worked and paid enough National Insurance contributions, usually within the last two tax years, you may be able to claim a benefit based on your contributions.
What to do if you have problems claiming Universal Credit
IF you're experiencing trouble applying for your Universal Credit, or the payments just don't cover costs, here are your options:
- Apply for an advance – Claimants are able to get some cash within five days rather than waiting weeks for their first payment. But it’s a loan which means the repayments will be automatically deducted from your future Universal Credit payout.
- Alternative Payment Arrangements – If you’re falling behind on rent, you or your landlord may be able to apply for an APA which will get your payment sent directly to your landlord. You might also be able to change your payments to get them more frequently, or you can split the payments if you’re part of a couple.
- Budgeting Advance – You may be able to get help from the Government for emergency household costs of up to £348 if you’re single, £464 if you’re part of a couple or £812 if you have children. These are only in cases like your cooker breaking down or for help getting a job. You’ll have to repay the advance through your regular Universal Credit payments. You’ll still have to repay the loan, even if you stop claiming for Universal Credit.
- Cut your Council Tax – You might be able to get a discount on your Council Tax or be entitled to Discretionary Housing Payments if your existing ones aren’t enough to cover your rent.
- Foodbanks – If you’re really hard up and struggling to buy food and toiletries, you can find your local foodbank who will provide you with help for free. You can find your nearest one on the Trussell Trust website.
You do not have to wait until you have used up your redundancy payment to be able to sign on.
Citizens Advice has a benefits checker where you can see what benefits you may be entitled to.
If I get benefits or Universal Credit will they stop?
Redundancy payments are taken into account when calculating whether you can receive means-tested benefits.
If your redundancy payment means you have more than £16,000 and you are under State Pension age, then you are not entitled to means-tested benefits (except maybe some council tax support).
If your redundancy payment means you have between £6,000 and £16,000, you may be entitled to means-tested benefits, but it may be lowered.
Pay in lieu of notice and holiday pay are be treated as earnings for Universal Credit in the assessment period in which they are paid – so the amount you receive may change.
Can I get made redundant while on furlough?
Your employer can still make you redundant while you’re on furlough or afterwards.
But your rights as an employee are not affected by being on furlough, and this includes your redundancy rights, so you are still entitled to the same financial help.
What happens to my pension?
First, check what kind of pension you’ve got: you will need to decide whether to leave it where it is or transfer it somewhere else.
In most cases, you can either leave your pension in your existing scheme and when you retire you will receive a pension from that scheme.
Or you can transfer your pension contributions into your own personal pension.
In some cases, you can move your pension into a new employer’s scheme, if it will allow you to.
The Money Advice Service has more useful information on pensions here.
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