Bouncing back after the sack
THE GUARDIAN - 1ST OCTOBER 2004
Money can be the most pressing problem for redundancy victims. The six-figure platinum parachutes that top executives can enjoy on they way out of their high-rise offices rarely cover anyone form the lower echelons.
Managers and executives get less – around 2.3 week’s salary per year of service. And that has become meaner over the years. The DBM survey shows a fall from 2.8 weeks per year in 1996 and 3.5 weeks per year in 1992.
But that is still more generous than the minimum statutory redundancy pay level which must be paid providing you have worked for the employer for a minimum of two years. this gives 1.5 a weeks’ pay for each complete year in which you were aged between 41 and 65, one weeks for each year between 22 and 40 and half a week’s wages for each week between 18 and 212.
And if that sounds, mean don’t forget that the upper weekly pay limit for this scheme is £220, little more than half the national average wage. If your employer has become insolvent or disappeared, contact the Redundancy Payments Office helpline. You may also be entitled to holiday pay.
Redundancy payments are tax-free up to £30,000, although payments made monthly in lieu of notice – a trick sometimes used by employers who want either to be vindictive or prevent key employees working for competitors – are taxed as income.
You cannot apply for means tested benefits such as Income Support or Housing Benefit if your lump sum, plus all other savings, is more than £8,000 in the bank. Their payment also depends on any income your partner, whether married or not, brings in.
But whether the redundancy was voluntary or compulsory, you can apply for Jobseekers Allowance (JSA) if you have the correct National Insurance contribution record, a near certainty if you have been in full-time employment for any length of time.
This pays £50.35 a week after the first three days of unemployment for up to six months provided you are capable of work and available. Registering for JSA ensure you retina your National Insurance record. After applying for state benefits, the next stage is to try to sort out regular debt repayments.
Tell your bank about your problem: they can be more sympathetic if they know about the difficulty. They may be able to arrange loans – or, at least, not bounce your cheques because your monthly salary suddenly stops. Banks are also impressed if you produce a budgeting plan.
Contact your mortgage lender. You may be able to adjust your mortgage payment provided it is a standard variable rate repayment type. Try to repay expensive credit card debt: you will not be able to transfer to a lower interest card unless you applied for it before your redundancy as your credit score once you are out of work is zero.
It is also too late to apply for redundancy insurance once there is the slightest suspicion that you job is under threat. These policies can cover credit card payments, the monthly mortgage bill and other loans, but underwriters are notorious for finding small print reasons to dodge claims
But for those who plan ahead, controversial Lloyd’s agent Burgesses – previous offerings include policies to protect against Alien Invasion and Immaculate Conception – has a less jokey EarningSafe policy which will pay up to £2,500 a month for between £3.25 and £3.75 a month for each £100 of cover depending on how long you can last out unemployed before claiming.
This is expensive but still cheaper than many others although most competitor products include accident and sickness cover as well
Losing your job means giving up work-related benefits such as private medical insurance, life cover and a pension. Few can afford to keep up their medical cover and there is little you can do about pensions until you find a new job.
