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What to do if you’ve been made redundant

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Covid-19 has led to hundreds of thousands of jobs being lost. Between July and September 2020 there was a record 181,000 increase in the number of redundancies, as many companies began to cut jobs in anticipation of the end of the furlough scheme.

Redundancies are higher in those sectors that have been particularly damaged by Covid-19, such as hotels, restaurants and tourism. This means that one of the groups being most affected by redundancy are younger people, aged 16-24, who tend to be the main core employees of these businesses.

But redundancy can hit you whatever your age, employment sector or circumstances. So if you are currently facing the prospect of redundancy, what do you need to know? And if you have just been made redundant, what should you do?

You still have redundancy rights during Covid-19

First things first. If you are being made redundant, you still have certain rights, even during the pandemic. You need to be aware of these and make sure you are being treated fairly and are being given the money, time and support to which you are entitled.

Redundancy rights include:

  • Redundancy pay
  • A notice period
  • A consultation with your employer
  • Help with other job options

Let’s take a quick look at each of these.


Redundancy pay

If you are being made redundant, there are two types of redundancy pay you could get: statutory redundancy pay and contractual redundancy pay.

Statutory redundancy pay
Statutory redundancy pay is what you are legally entitled to if you have been working for your current employer for 2 years or more. Your employer will pay you this money.

The amount of money you will receive varies according to how long you have worked for the company and what age you were at the time. It ranges from half a week’s pay for each full year you were under 22, up to one and half week’s pay for each full year you were 41 or older.

You can use this calculator on the Gov UK website to help you work out how much statutory redundancy pay you are entitled to.

You are not eligible for statutory redundancy pay if you are employed as any of the following:

  • crown servants
  • member of the armed forces
  • police
  • share fisherperson
  • an apprentice who is not an employee
  • domestic servant for a member of your family

Contractual redundancy pay
On top of your statutory redundancy pay, you may be entitled to be paid extra money by your employer if your employment contract includes contractual redundancy pay. If you are not sure whether this is the case, you need to check your contract or staff handbook to find out how any contractual redundancy pay will be calculated and when you will receive your payment.

If the business you work for has closed down you can still take action to claim any money owed to you by your employer, including statutory redundancy pay. Even if your employer is insolvent - i.e. has gone into liquidation or administration - there will be an official administrator who should contact you to explain what is happening and what you need to do to claim your statutory redundancy pay.  

A notice period

You must either be given a notice period before your employment ends, or be given pay in lieu of notice for this period of time. Your notice period will depend on how long you have worked for the company, starting from one week if you have worked there for between one month and 2 years, up to 12 weeks if you have been employed for 12 years or more.


A consultation with your employer

If you are being made redundant, you are entitled to a consultation with your employer to understand why you are being made redundant and whether there are any alternative possibilities, for example another job in the same company. If more than 20 people are being made redundant, your employer must follow government collective consultation rules, and involve the union if there is one.

If jobs still exist in the company, it’s essential that employees must be selected for redundancy in a fair and objective way. For example based on length of service, level of experience or capability to do the job. If you think you have been selected for any other reason, you may be entitled to claim for unfair dismissal. But if your employer is closing down your whole section and your job no longer exists, they do not have to demonstrate any objective selection process.


Help with other job options

You have the right to expect some help and support from your current employer in finding you another job. For example, it may be that there is some kind of suitable alternative job within the company or parent organisation. But if not, then you are legally entitled to take reasonable time off during your notice period to look for work or retrain for another job.


How do I sort my money out?

If you are facing redundancy, you need to take an honest look at your finances. The first thing to do is make a budget that includes all the money you have coming in - including the redundancy pay that we looked at earlier - and all the expenses you have to meet. Read our recent article How to make a budget and stick to it for further advice on what to include in your budget.

Making a budget will help you understand the financial gap your redundancy is going to cause. You now need to find ways of plugging that gap until you find another job and are earning again. Here are five ways to plug that gap:


There are two main benefits that could help you at this time. You may be able to claim one or the other, or both:

  • New Style Jobseeker’s Allowance (JSA)
    You are eligible for JSA if you are either unemployed or work less than 16 hours a week, and have paid enough National Insurance contributions for the previous 2 tax years. JSA is worth £58.90 a week for under 25s, and £74.35 a week for 25’s and over. It can be claimed for up to six months and is paid irrespective of savings or partner’s income.
  • Universal Credit
    Universal Credit is a benefit for people of working age that was introduced in 2013. If you have been made redundant and are on a low income as a result, you are eligible to apply for Universal Credit if you and your partner have £16,000 or less in savings between you.
  • It is worth pointing out that if you already receive any older benefits - such as income support, housing benefit, child tax credit or working tax credit - these payments will stop if you make a claim for Universal Credit. If this is the case it would be worth getting some financial advice to work out the best option for you.

    If you are on Universal Credit, you can get help to cover your rent and certain service charges, and also a reduction in Council Tax.

We will look in more detail at benefits in our next article.


Payment holidays

Many mortgage lenders and credit card companies are offering payment holidays during the pandemic. So if you are struggling to make payments, it’s definitely worth talking to your mortgage provider or credit card company to see if you can arrange this.

If you are in rented accommodation, it is a good idea to talk to your landlord/lady to see if they would be willing to allow some kind of payment holiday or to accept temporarily reduced payments.



If you remember taking out a mortgage or rent protection policy when you moved into your home then do check this to see if any part of your mortgage or rent might be covered. It’s also possible that your landlord/lady may have some kind of rental protection policy that they could claim your rent from if you are unable to pay it.


Casual work

Whilst you look for a long term job, it is worth seeing if there is anything you can be doing on a temporary basis. You may be able to find opportunities for online work: check out websites such as Amazon Mechanical Turk. Or try investigating local demand for services such as cleaning, gardening, DIY, pet sitting, dog walking or babysitting.


Selling things

You can also top up your short term finances by selling goods to raise cash. The online auction site eBay estimates that the average UK household has around 42 unused items, particularly in the garage. eBay research suggests selling these items can raise on average around £2,600. As well as eBay, there are many other online selling sites including Facebook Marketplace and Gumtree. Also explore other local selling options, including selling more specialist goods (such as antiques, cameras, jewellery or vinyl records) direct to small shops.


What help is available?

There are various organisations providing further advice in the face of redundancy. Some options to try include:

If you are in the position where you are confident of being re-employed soon and need a short term loan to tide you over, you may be worried about whether your credit score will currently be strong enough for your application to be accepted.

But it should be possible to find a fair lender that can see beyond this potential hurdle, even while you are out of work. At Fair Finance we can offer bad credit personal loans as long as you are able to afford the repayments, even if you are receiving benefits. What matters to us is that a loan is affordable for you.

So if you need any additional funding during this difficult time, do get in touch with us at Fair Finance to see how we can help.

If you have problem with too much debt or problems paying priority bills, such as rent or utility bills, we may be able to help too. If you live in Greater London, our in-house Debt Advice team can offer advice and support to help you get your finances back on track.

We hope the information above is helpful if you are either facing the prospect of redundancy or have recently been made redundant.

Check back here soon for more financial and lifestyle tips from Fair Finance.

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