If you’re at risk of redundancy or have recently lost your job, we can help you understand your employment rights and redundancy pay. Plus, how to manage your money and check if you’re eligible for any benefit payments.
Redundancy and losing your job
Know your employment rights and how to get help
If you’re faced with redundancy or job loss, your employer must treat you fairly and you have certain legal protections. It’s important to understand where you are in the process, check what could happen if you took up any alternatives offered to you and where to get employment advice if you need it.
Follow these steps to work out what you need to do
Check your employment status
Whether you qualify for redundancy pay depends on your employment status. Usually, if you’re an employee, you’re entitled to statutory redundancy pay if you’ve worked for your employer for two years or more.
But if you’re an agency worker or work in the gig economy, specifically a zero-hours contract, it can be harder to define your employment status. For example, your employer might say you’re self-employed and not entitled to redundancy pay, when actually you’re an employee.
If you’re not sure about your status, it’s important to check it and make sure you’re not missing out on redundancy pay.
Find out more about contractual redundancy pay and statutory redundancy payOpens in a new window at Citizens Advice.
Check your employment status in our guide Different kinds of employment status
Check the redundancy process is fair
If you're told that you're at risk of redundancy, the first thing to do is check that your employer is following the process fairly.
Your employer legally must give you a statutory notice period before asking you to leave the company. They're not allowed to discriminate when choosing who to make redundant.
Your employer must always:
- consult with you to see if there are ways of avoiding redundancy
- write to you about your entitlement to statutory redundancy pay
- give you the opportunity to appeal against the decision
- consider any suitable alternative employment.
It might be worth asking if you can take a colleague with you to any redundancy consultations, such as a trade union or staff rep. You don’t have a legal right to be accompanied during these meetings, but many employers should allow it.
Consider suitable alternatives
Instead of redundancy, your employer might ask you to:
- reduce the number of days or hours you work each week (called short-time working)
- take whole days off (called a lay-off)
- do a different job altogether
- change your contract.
Whatever the offer, it’s worth considering and taking advice from your trade union or employee representative before making up your mind. If you don’t have one, you can talk through your options with an adviser at your local Citizens AdviceOpens in a new window, AcasOpens in a new window, or the Labour Relations Agency (LRA)Opens in a new window in Northern Ireland.
Find out more in our guide Early retirement
Find out what to do if you think you’re being unfairly dismissed
You may have a case for unfair dismissal if you think your employer:
- didn’t follow a fair process
- discriminated against you on the grounds of age, race, gender, sexuality or other protected characteristics.
You may have a case for automatic unfair dismissal if your think your employer is letting you go for any of these reasons:
- pregnancy or maternity
- family reasons, including taking parental leave or caring for dependants
- belonging to a trade union or acting as a staff representative
- whistleblowing on bad practice or health and safety issues
- working part-time or on a fixed-term contract
- because you asked for flexible working
- because you raised concerns about statutory employment rights, including pay, working hours or annual leave.
Get free, confidential and impartial advice from workplace advice services AcasOpens in a new window or, in Northern Ireland, the Labour Relations Agency (LRA)Opens in a new window
Find out more about working out if your redundancy is fair in our guide Unfair dismissal versus redundancy
Get free, confidential and impartial advice
Sometimes, it’s not easy or possible to talk to someone about redundancy or job loss, especially if your workplace doesn’t have an HR department or you suspect you might be being unfairly dismissed.
If you can't speak to your employer, union or a staff rep, workplace advice service Acas offer expert advice on all employment rights issues in England, Scotland and Wales.
You can also use AdvicelocalOpens in a new window to find employment advice in your area.
Call the Acas Helpline on 0300 123 1100 or visit the Acas websiteOpens in a new window
If you're in Northern Ireland, call the Labour Relations Agency Helpline on 0330 055 5300 or visit the Labour Relations AgencyOpens in a new window website
Find out how long your notice period is
Check your contract to see the length of your notice period — the amount of time between when your employer tells you that you’ll be made redundant and your last working day. If your employment contract entitles you to a longer notice period than the statutory amount, your employer must give you this.
You’re entitled to a minimum statutory notice period of:
- at least one week’s notice if you’ve been employed between one month and two years
- one week’s notice for each year if you’ve been employed between two and 12 years
- 12 weeks’ notice if you’ve been employed for 12 years or more.
Checklist for your last day
Before you leave the company, make sure you receive the following:
- any redundancy pay, wages, holiday pay and other money due to you
- a written statement showing how your redundancy pay has been calculated
- a letter stating the date of your redundancy
- job references from your employer
- your P45 tax form (to give to your new employer so you’re taxed correctly), and details of your pension.
Find out if you qualify for redundancy pay
Find out if you qualify for redundancy pay
You might be entitled to statutory redundancy pay if you’ve worked continuously for your employer for at least two years. If you work on a casual basis, or are an agency or temporary worker, you probably won’t qualify for redundancy pay.
Follow these steps to work out what you need to do
Understand what makes up a statutory redundancy payment
How much you’re entitled to depends on how long you’ve been in the job, your age in each year you worked there and your current salary.
You'll get:
- half a week’s pay for each full year you were under 22
- one week’s pay for each full year you were 22 or older, but under 41
- one and half week’s pay for each full year you were 41 or older.
Sadly, you won't be entitled to a statutory payout if you've been working for your employer for less than two years or your employment status means you don’t qualify for one. However, you might be entitled to contractual redundancy.
Find out more about your employment status and rights in our guide Different kinds of employment status
Check your employment contract or staff handbook
Statutory redundancy pay is the legal minimum. Your employer can’t pay you less than this.
But they might have to pay you more if your employment contract says so. This is called ‘contractual redundancy pay’.
This could mean a bigger lump sum or getting a payout, even if you’ve worked there for less than two years.
If there’s no mention of redundancy in your contract or staff handbook, assume you’ll get the legal minimum.
Work out your redundancy pay using our calculator
You might receive other lump sum payments in your final pay packet when you’re made redundant.
If you’re owed these under your contract of employment (rather than as compensation for losing your job), they will be taxed in the same way as your normal pay.
Payments might include any of the following:
- wages and bonus payments
- pay in lieu of notice (PILON)
- holiday pay.
Use our Redundancy pay calculator
Advice is tailored to your situation, whether recently made redundant or think there’s a chance of redundancy. Our Redundancy pay calculatorOpens in a new window will help you understand you rights and take control of your money.
Check if you'll have to pay tax on your redundancy pay
You don’t pay tax or National Insurance on any redundancy pay up to £30,000. If you receive more than £30,000, you’ll have to pay tax at your highest rate on the amount over £30,000. You might be able to offset any tax liability by paying into your pension.
If you receive any non-cash benefits as part of your redundancy package, like a company car or computer, this will be worked out as a cash value and added to your redundancy pay for tax purposes.
You'll have to pay tax on any pay you get in lieu of notice (PILON). You're responsible for making sure you've paid the right amount of tax.
See our guide Do you have to pay tax on your redundancy pay?
What to do if your employer can't pay you
If your employer has gone out of business or tells you they can't afford to pay you, the government’s Redundancy Payments Service will pay you the statutory amount instead.
The insolvency firm dealing with your employer should give you a form RP1 to make a claim.
It's important to make sure you claim any benefits you're entitled to because when the Insolvency Service works out your payments they will deduct any Jobseeker's Allowance or Universal Credit that you qualify for, regardless of whether you're claiming these benefits.
Start your claim for redundancy paymentsOpens in a new window on GOV.UK
Contact the Insolvency ServiceOpens in a new window if your employer cannot pay your statutory redundancy payment because it’s insolvent on 0300 123 1100Opens in a new window
Find out what benefits are available to you if you’ve lost your job
Understand what benefits you could claim
You might be able to claim benefits while you’re looking for a new job to help with your housing and living costs. Don’t hesitate or delay claiming them because you’ll also get National Insurance credits to protect your State Pension.
Follow these steps to work out what you need to do
Make a claim as soon as you can
It can take longer than you think to get back into work, so it’s always worth checking what benefits you could claim.
Benefits can only be backdated for a limited period and you might have to wait a few weeks for your first payment after you’ve claimed, so it’s best to apply early if you qualify.
You can always cancel your application if you get another job.
Use our Benefits calculator
If you’re living on a low income or have had an income shock, use our Benefits calculator to quickly find out what you could be entitled to.
Claim new style Jobseeker's Allowance (JSA)
If you’ve lost your job, the main benefit you can claim is new style JSA.
Most people can claim it if you’ve made enough Class 1 NICs (National Insurance contributions) in the last two full tax years. If you qualify, it’s not means-tested, so you can claim it regardless of your household income or savings.
You can get JSA for up to six months and it will be paid into your bank, building society, or credit union account every two weeks.
To qualify, you must be under State Pension age and available for and actively seeking work.
If your household income is low and you or your partner have savings of less than £16,000, you might be able to claim Universal Credit as well as JSA to help with other costs, such as housing and bringing up children.
Find your nearest Jobcentre PlusOpens in a new window on GOV.UK
Find out if you qualify for Universal Credit
Universal Credit can help with basic living costs, including rent and bringing up children.
It’s based on household income, so if you live with someone as a couple, their income will affect how much you'll get.
Your redundancy payment could affect how much you get and if either of you have savings over £16,000, you won't qualify for Universal Credit.
Universal Credit has replaced six other benefits, including tax credits. So if you (or your partner) claimed those benefits, you will need to claim Universal Credit if you haven't already done so.
Our free printed guide Getting ready for Universal Credit in England and Wales tells you everything you need to know about preparing your claim
Get help with housing costs
If you’re renting:
- you might be able to claim the housing element of Universal Credit if your household income and savings are very low, or
- apply for a Discretionary Housing Payment from your local council to top up payments.
If you have a mortgage:
- check whether you have mortgage or income payment protection insurance
- find out if you are entitled to Universal Credit, Support for Mortgage Interest and Discretionary Housing Payments.
Find out more our guides:
See if you qualify for Council Tax Reduction
If your income is very low and you have little or no savings, your council might agree to reduce your Council Tax (or Rates in Northen Ireland) bill.
How much the reduction will be depends on your local scheme and may depend on whether you're getting income-related benefits, such as Universal Credit. Most councils won’t backdate payments.
If you’re claiming Universal Credit or Jobseeker’s Allowance for the first time, apply for a reduction as soon as you’ve made your claim. If you live alone, you’re also entitled to a single person discount.
Apply for Council Tax ReductionOpens in a new window on GOV.UK
Support if you're looking for work
You might be able to use the Flexible Support Fund to help with the cost of travelling to interviews and training or with extra costs you might have in the first months of starting a new job.
You can also apply to pay for upfront costs if you need to secure a childcare place. Ask your work coach if you qualify.
When you’ve been claiming certain benefits – including Jobseeker’s Allowance or Universal Credit – for three months, you’re entitled to a Jobcentre Plus Travel Discount Card.
You can get half-price rail tickets and discounts on selected bus services for six months (18-24-year-olds) or nine months (over-25s).
You can apply for a Jobcentre Plus Travel Discount Card at your local Jobcentre Plus.
Find out more about support to help with the cost of transportOpens in a new window on GOV.UK
Find out more about what to do after your job ends
What to do after your job ends
Losing your job can be stressful but it’s important you don’t let this stop you from moving on to another job or a career change. You’ll also need to decide what to do with your pension or any lump sum payments.
Follow these steps to work out what you need to do
Update your CV
Your CV is the first opportunity you get to stand out to a new employer, so you need to make sure it shows the best of your abilities and achievements.
Speak to your work coach about local support to help you write a CV at your Jobcentre Plus.
Want to create a CV that stands out and gets you an interview?
Get government support to help you find work
Jobcentre Plus has the UK’s largest database of job vacancies (called Find A Job or Jobcentre Online NI in Northern Ireland).
They can also help you in applying for jobs, filling in application forms and preparing for interviews. Jobcentre Plus can also help with extra support to get you back into work.
Support if you're looking for work
You might be able to use the Flexible Support Fund to help with the cost of travelling to interviews and training or with extra costs you might have in the first months of starting a new job.
You can also apply to pay for upfront costs if you need to secure a childcare place. Ask your work coach if you qualify.
When you’ve been claiming certain benefits – including Jobseeker’s Allowance or Universal Credit – for three months, you’re entitled to a Jobcentre Plus Travel Discount Card.
You can get half-price rail tickets and discounts on selected bus services for six months (18-24-year-olds) or nine months (over-25s).
Find out more about support to help with the cost of transportOpens in a new window on GOV.UK
Decide what to do with your pension
If you have a pension, you usually have to do one of the following:
- Leave your pension with your employer and when you retire you will receive a retirement income from that scheme. This is usually the best option if you belong to a defined benefit scheme.
- Transfer your pension pot. This could be to a new employer’s scheme when you find a new job, if the new scheme will allow this, or to your own personal pension.
Before you make a decision about your pension, read our guide What happens to my pension if I leave a job or opt out?
Make the most of your redundancy pay
You may have received a lump sum redundancy payment. While you're deciding the best way to use the money, here are some things you might want to consider.
Supplement your income until you get a new job
Use our Budget planner to work out how much you will need each week or month, and how long you can make the money last.
Clear debts, if this will bring spending down to a more manageable level
Aim to clear any priority debts as quickly as possible. Check if there are any early repayment penalties on debts you are thinking of repaying in full. Be aware that repaying debts might affect any claim for means-tested state benefits if you did not have to repay the debts and did so at least in part to increase your benefits by reducing your savings.
Set up emergency savings
Having some emergency savings is a great way to prepare for unexpected expenses. Consider putting your lump sum in an easy-access account or a current account that pays interest.
Boost your pension savings
You get tax relief on the amount you pay into a pension scheme up to set limits.
Find out more in our guides:
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