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Up to 9.6 million jobs in 1.2 million companies have been filled and, unfortunately, large numbers of layoffs are expected. As quoted in a recently released OBR report, a shocking 1.3 million people are projected to flow straight from vacation into unemployment. This means that with a second wave of coronavirus, the UK unemployment rate could be close to 15%. Preparing for redundancy now could protect you from future financial difficulties.
As of this week the UK is officially in recession and unfortunately many UK businesses will suffer if government support programs come to an end. For many, the fear of redundancy has subsided, and while vacation doesn't necessarily mean you will be laid off, it is wise to prepare for a worst-case scenario. By creating a contingency plan now, you will be well prepared if you are faced with redundancy.
These are our tips on how to get the most out of your vacation to prepare for possible redundancy.
sort your finances
Get tested and examine the reality of your finances. Assess how much you are spending, what is required, and where you can make savings.
to pay off a debt
If you still have savings, start by paying off any debts you have. Interest rates on savings are at lows at all times, and the cost of debt outweighs the interest on savings. But be careful not to spend it all! In the face of potential layoffs, set aside some cash to make sure you have a stable emergency fund.
If you have multiple debts, it may also be worth looking into debt consolidation loans. These combine all of your loans into one so you can repay it monthly, sometimes at a cheaper rate. Keep in mind that once you are laid off, it is much more difficult to apply for a loan and it can affect your credit score. If this is a suitable option for you, don't wait too long to apply! Please check your Experian credit score now.
An emergency fund is a separate account with money that is made available for emergencies. There is no set amount you must have in an emergency fund, but ideally the mandatory expenses should be at least 3 months, including mortgage or rent payments, utilities and bills, food and necessary travel expenses. When there's not much to put aside, check out savings apps that round up your expenses. That way, you can save a little without even realizing it.
Live as if you have already become redundant. Cut down on unnecessary spending, use free services like libraries, and put as much cash away as possible. Do you know exactly what you are spending your money on? It can be surprising to see how much money is being spent on frivolous things if you don't think about it.
For more information, see our articles 15 Tips on Living Frugally and What You Saved in Lockdown (and How to Keep Saving Afterwards).
Increase Your Income
Use some of your free time while on vacation to find other ways to make money. We have an entire money making section to check out if you have any ideas!
Talk to your network
According to Business Insider, at least 70% of all positions are not officially advertised. In fact, most positions are filled either internally or through networking. Because of this, it is widely considered to be the most effective way to get a job. Not only that, but a referral from someone already with the company tends to increase your chances of getting a job. If you don't check in to your network regularly, you may miss out on job opportunities.
Invest some of your time on vacation building and keeping in touch with your professional network. However, keep in mind that it takes time to build a strong network. Getting into the habit of networking will quickly become second nature and easy to incorporate into your routine.
Focus on learning new skills
Part of your redundancy preparation should include learning new skills, taking a course, or getting a new qualification. There are a whole range of options, from free courses to industry-led programs. LinkedIn Learning is a popular option – it's a paid service, but you can try it for free for a month! Learn everything from business leadership and management skills to mastering Photoshop. Whatever you are looking for, there is an extensive range of courses offered by experienced teachers.
Udemy is another popular choice. You can also choose from a wide variety of courses at affordable prices. Whatever you want to learn, there are plenty of ways to improve your skills without breaking the bank. You can also try the Open University's free online courses to learn everything from corporate accounting to medieval history!
It is important to do everything possible to make yourself more attractive to employers. Training courses not only do this, but keep your mind active and up to date with the latest news and software in your relevant industry. It looks good for potential employers to have their vacation time spent productively and new skills offered to them.
Update your resume and search for jobs now
Another part of the redundancy prep is to start your job search now! Don't wait until you are unemployed to update and search your resume. That saves so much stress later. Our article, How to Write an Attention-Grabbing Resume Contains lots of tips on how to update your resume and stand out from potential employers.
The current climate means that professional things are difficult and competitive. But the earlier you start looking for a job, the greater your chance of being successful and finding something right for you.
additional tips for redundancy preparation
You may not get fired when the vacation ends – but it seems many employers are planning on making cuts in the coming months. Keep these things in mind:
- Know your redundancy rights – Most employers have a dismissal policy. Therefore, carefully review your employment contract for everything you are entitled to. An employer can choose to offer more than the statutory severance payment, but does not have to.
- Join a union – If your company has a union, join it. Unions are there to provide assistance and may even be able to negotiate a redundancy package on your behalf. If you feel you have been treated unfairly during the dismissal process, a union can represent you during an appeal or complaint process. You can find your union here.
- Check out the benefits – If you are made redundant, you may be eligible for government assistance. Unfortunately, the benefits are means tested and any money you get on a layoff payout is counted as a "saving" which could affect your eligibility or how much you could get. Use the state performance calculator to check whether and how much you can receive benefits.
What happens if my employer goes bankrupt?
A major, inevitable cause of layoffs is corporate bankruptcy. Unfortunately, many companies cannot afford to recover from the pandemic, so their employees have no idea where to go.
If your employer goes broke and no other company buys the company, employees are usually laid off. If the company runs out of money to claim severance payment, you will need to apply for your statutory severance payment through the Redundancy Repayments Service.
What else can I say?
Any wages or vacation pay owed by a company that goes bankrupt can also be claimed from the National Insurance Fund. Unlike the severance pay, which is tax free on the first £ 30,000, all money is taxed and capped at £ 538 per week (or £ 560 in Northern Ireland).
- wage – You can claim an unpaid wage for up to 8 weeks, including a payment for a protection premium. This is compensation that your employer did not consult with you before you were fired.
- Vacation pay – Up to 6 weeks holiday allowance can be claimed.
- Pay compensation – A weekly wage after one month of service, then a weekly wage per year of service up to a maximum of 12 weeks.
- Pension – Any unpaid pension contributions, although you will need to contact an insolvency practitioner to make your claim.
For complete information on your rights in the event of your employer's insolvency, please visit the government website here.
more useful reading
If you have further questions about redundancy preparation, visit our message boards, where you can find tons of help and answer your questions.
In the meantime, check out our FREE eBook, Your Redundancy and Debt Action Plan. Or one of the following articles.