Britain has 8.9 million workers on furlough because of the pandemic, but the scheme which is currently paying 80% of their wages is due to run out in October and many of them fear being made redundant when the government cash runs out.
Tens of thousands have already been made redundant when their companies decided they had to scale down their work force as the coronavirus wreaked havoc with the economy.
But what is redundancy and how might it affect you?
Workers are made redundant because their employer needs to reduce the size of their workforce – a situation which experts are predicting will happen to thousands of companies across the land as the economy suffers from the effects of coronavirus.
The debt charity StepChange has produced a guide to what happens when posts are made redundant and the workers find themselves drawing Job Seeker’s Allowance.
What are your rights?
If the worst does happen it’s important to know your rights and what options are open to you.
If you’re made redundant you may be eligible for certain things:
- Redundancy pay
- A notice period
- A consultation with your employer
- The option to move into a different job
- Time off to find a new job
If you’re employer has gone out of business you can apply to the government for:
- A redundancy payment
- Holiday pay
- Outstanding payments like unpaid wages, overtime and commission
- Money you would have earned working your notice period (‘statutory notice pay’)
Many people already in debt are unsure what to do with the redundancy pay they receive.
Should they pay off their existing debts or take out more credit to pay off the debts and hang onto the redundancy cash.
StepChange advise: “If you’ve received redundancy pay, we recommend you use it to pay for essential household bills only.
This is because you don’t know how long it may take to find a new job.
“Make sure you put your redundancy pay into a bank account where you do not owe money.
If you don’t, the bank may take it to repay any money you owe them.
No more credit
“We’d advise against taking out more credit if you’ve been made redundant.
Although getting a credit card or loan or increasing your overdraft might seem like a good way to pay off some of your debts or cover your day-to-day living expenses, it’s only a short-term solution.
“Taking out more credit when your income has reduced is likely to make your financial situation worse, especially if you’re unable to pay it back on time.”