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Know your rights
Remember you're not alone
Redundancy can be a devastating, sometimes brutal, experience but it's not your fault. "You aren't responsible for the vagaries of the western economic cycle. You didn't start the credit crunch in your own backyard," says Phillip Hodson, a fellow of the British Association for Counselling and Psychotherapy.
Hodson calls redundancy "a social invitation to depression". "We all project on to our work a sense of family feeling. It's difficult to isolate the rejection in a rational way as due to the western economic cycle, the ******* in charge of hiring and firing, or bad luck," he says. "We tend to see this as overwhelming evidence of our own failure rather than seeing the context."
Remember that context is a major realignment in the shifting tectonic plates of the global economy. There isn't anything you can do about that. It is reckoned that as many as 1,600 Britons every day could lose jobs in 2009. That commonality of experience should assist our coming to terms with redundancy.
"In a funny way it is psychologically better to lose your job now rather than in more affluent times simply because now there are so many people involved," says Cary Cooper, professor of organisational psychology and health at Lancaster University Management School. "It will still feel a rejection but you can rationalise it by saying that it's just the time in which you live in." In other words, you are not alone.
Stay positive
But how do we come to terms with such a momentous upheaval? "Keep active and don't wallow in rejection," says Cooper. "The most important coping strategy is to sit down and reflect on what your skills are before you start looking for a new job or trying to get training." The most psychologically damaging course is to pursue the old job, or versions it, when those jobs don't exist because they are in sectors such as property or financial services. "That's not a smart move," says Cooper. "The smart move is to say: 'What am I really good at? What do I enjoy doing?'"
"I tell people: 'Your job now is to get a new job,'" says Michael Carroll, professor of industrial psychology at Bristol University. It is tempting for the newly jobless to lose the discipline of the working day. "People quickly get slack about their lives. Sleep in, go down the pub, having another sleep in the afternoon," says Carroll. "Structure is a good way of keeping the negative feelings away."
The best way to manage stress is to talk with loved ones and friends. "If you have nobody you're close to, then there are always counsellors," says Cooper. "A lot of men rush around, try and be macho. Women cope better because they seek social support."
Bear in mind that time is a healer
No matter how awful you feel now, the long term prognosis is better than you think. Counsellors agree that many people come to view redundancy, traumatic at the time, as one of the best things that ever happened. "If you're adaptable, it is liberating," says Cooper. "You might have been in a job for 10 or 15 years that you didn't like and was going nowhere. You get made redundant and that gives you control."
Keep calm
Check the small print
What rights do you have if you're told to clear your desk? Read your employment contract. "People generally have no idea what's in it," says Lorraine Butler, an adviser at the City of London's Citizens Advice Bureau. She has been seeing all kinds of employees, from stockbrokers to building-site workers, over recent weeks. "The higher-paid City workers tend to have contracts with more favourable terms than those they are entitled to under the law. The chances are, though, if you are on the factory floor and on the minimum wage, that's not going to be the case."
By law, you are entitled to notice calculated on how many years you have been working for the company - a week per year, up to a maximum of 12 years. It can be a rude awakening just how little the statutory redundancy payment is, says Kerry Underwood, an employment law expert at Hemel Hempstead firm Underwoods. To qualify, you need two years' service. The formula is half a week's pay for each year if you are between 18 years and 21; one week's pay up to and including the age of 41; and thereafter 1.5 weeks pay subject to a maximum of 20 years. The payment is capped at £330 a week. Someone who is 40 with four years' service will get £1,320. "That can be a nasty surprise, especially for people who are coming in now from the financial services sector," says Underwood. Check your entitlement by using the "ready reckoner" at berr.gov.uk.
Try to agree terms
Your employer might be willing to offer more than the legal minimum (maybe a month's pay for every year). You could also negotiate over notice periods and holiday leave or keep your laptop or stay in the company medical scheme. The maximum tax-free redundancy payment is £30,000. You could talk to your employer about using your severance pay to boost your pension (possibly the balance over the first tax-free £30,000).
Fight back
What if it all goes horribly wrong? Can you take your employer to court? It depends. If you strike what's called a compromise agreement, it precludes legal action. This is where you take independent legal advice to assess whether what's on the table is fair and, in return, waive your rights. Before agreeing anything, you take advice from an independent lawyer, for which your employer picks up the bill. "Lawyers often get more than statutory minimum out of the employers," says Underwood. As he puts it, the "the suggestion of an unfair dismissal claim" if procedures aren't properly followed can "concentrate minds". Maximum compensation for such a claim is £63,000.
There are five main obligations on your employer. "Firstly, they need to be able to show that it's a genuine redundancy - essentially, you are losing roles for staff and so, for example, offices are closing," says Russell Brimelow, a partner at employment law specialists Lewis Silkin. Secondly, if you are one of the selected "pool" then the employer's choice has to be objective. You should be told what the selection criteria are (usually a points-based system). They might include "last in, first out" (although such a policy can fall foul of age- and sex-discrimination rules); disciplinary history; or performance in the job. You can ask to see your point scores although you can't see those of your colleagues.
The third obligation, says Brimelow, is to consult properly. Where there are large-scale dismissals, or collective redundancies involving 20 or more employees being made redundant within a 90-day period, your trade union or employee representative should be consulted. The next obligation is to actively consider alternative employment. Offers have to be suitable both objectively and subjectively. Kerry Underwood says: "Suppose somebody moves you to a comparable job two miles away. If your place of work was originally 400 yards from where you picked up the kids from school, that could be objectively reasonable and subjectively unreasonable."
Go to court if necessary
The final obligation is that the dismissal procedure sticks to the law. If employers don't follow it, they could lay themselves open to an unfair dismissal claim before an employment tribunal. There is no legal aid to pay for a lawyer to represent you before a tribunal.
Contact your trade union if you are a member, your local Citizens Advice Bureau or law centre for free advice. Increasingly, lawyers act on a "no win, no fee" basis - they take a percentage cut (often 30% plus VAT) from any payout.
Don't fear going it alone. "There is no reason why a person with decent advice can't conduct their own case," says Butler.
Count the pennies
Plan ahead
The best way to prepare financially for redundancy is by building a savings buffer. Easy to say, but it's not something we tend to do. Shockingly, it is reckoned that the average Briton's savings would last 52 days if they were to lose their job. According to the Yorkshire Building Society, average monthly outgoings are £1,445 and the average accessible savings are £2,474.
Consider taking out insurance including unemployment cover. For a policy such as the Post Office's People's Lifestyle Protection policy, £45 a month buys you £1,000 income a month for up to a year should you lose your job. Insurance is there to protect you against unforeseen events, so can you take it out if you're already worried about losing your job? That depends, reckons Duncan Caesar-Gordon, head of protection products of the Post Office Financial Services. "If you haven't been officially notified that there are going to be cutbacks or restructuring, then you can take out our policy and - provided you don't get made redundant in the first 60 days - you can claim."
Sign on
If you haven't seen the inside of a job centre since you were a student 10 or 20 years ago, what should you expect? Things have "changed radically" since Boys from the Blackstuff, insists employment minister Tony McNulty.
He last drew the dole in the early 1980s and recalls the "uninviting smoky offices with screens separating staff from the public and a queue winding out the door". "We've had a £1.9bn modernisation of the network," says McNulty. "We have taken down the screens, there's a much more comfortable environment and we have refurbished all the offices. Hopefully, they are more welcoming places where people feel comfortable and relaxed."
Edward Graham, a welfare rights adviser at the Child Poverty Action Group, says there has been "an escalation in what's called conditionality" over the last couple of decades. "The conditions you have to satisfy in order to get Jobseeker's Allowance have gone up and up," explains Graham. Claimants now have to draw up a "jobseeker's agreement" promising to take steps to find new work. "You've always had to be actively seeking work. However you have to take more than two steps a week and, for example, one step might be to go for an interview or apply for a job," says Graham. "Staff at Jobcentre Plus can issue you with directives, and you can be instructed to apply for certain jobs." But he says that advisers do recognise that nine out of 10 people end their claim within the first six months to a year. "They know most people find themselves a job pretty quickly," he says. "They are unlikely to waste a lot of time offering support and laying down conditions for people who they know are going to find work anyway."
While you might not be expecting visiting your local job centre to be an uplifting or pleasant experience, Citizens Advice's Lorraine Butler urges you to go. "The important thing is that it keeps your national insurance going," she says. "So it's fundamental."
Claim what you're entitled to
The main benefit is Jobseeker's Allowance. If you are over 25 years old, the rate is £60.50 a week for a single person or £94.95 for a couple. Any redundancy payout might affect your entitlement to benefits. If you have capital of more than £16,000 you aren't eligible - that could include your redundancy payout - and there is a sliding scale between £6,000 and £16,000 reducing entitlement.
So what might be the income of a typical householder should the sole breadwinner suddenly lose his or her job? The National Debtline (NDL) reckons about £140.38 a week. It's an estimate based on an "average" family comprising Jobseeker's Allowance (£94.95), £14.08 in tax credits and £31.35 child benefit. "From that sum, our hypothetical family would have to pay their mortgage, utilities, telephone, car, insurance - everything," says NDL's Beccy Boden Wilks. "The only thing you aren't going to pay out for is council tax." You can claim council tax benefit. If you are renting, housing benefit is available for rent.
Take action to stay afloat
If you have a mortgage but neither insurance nor savings, you might find it difficult (or impossible) to meet your repayments. "You need to contact your lender, say that you are on Jobseeker's, you can't afford your mortgage but you're looking for, and hoping to get, a job," says Boden Wilks. If you haven't paid your mortgage for two months and haven't contacted your mortgage company, then the lender could apply to the county court for possession of your home. You cannot be evicted without a court order.
But there is now an agreement between the major lenders (called a pre-action protocol) to allow homeowners three months' breathing space. "Some have gone as far as to say six months," says Boden Wilks. "Bear that in mind when you ring them." There are a number of options to explore, such as moving on to an interest-only loan, a payment holiday, or extending the terms of the mortgage.
State support for people with mortgages only covers the interest. But, as of this month, the government cut the qualifying period to 13 weeks of unemployment from 39 weeks. The maximum size of mortgage qualifying for help has also increased from £100,000 to £200,000.
Sort out your priority debts from non-priority ones. Priority debts are your rent or mortgage, fuel bills and council tax. Non-priorities are unsecured loans - credit cards, store cards, and catalogues. Creditors with non-priority debts tend to scream loudest, ring you at home and deluge you with red-letter demands. "The reason for that is that their money isn't secured against anything you own, so they're worried they won't get it back," says Boden Wilks.
NDL has a budget sheet that will help you to calculate income after the mortgage, council tax, gas and electricity. If there's any money left, you can work out what you can afford and make creditors pro rata offers. NDL also has pro forma letters.
Start again
Look for a new direction
This involves some self-discovery. "If you're going to be retraining, draw breath and take stock first," says Penny de Valk, chief executive of the Institute of Leadership and Management. "Don't go straight in. You need to pause and ask yourself what you want to do. That's difficult when you're shocked and anxious about when the next salary cheque is going to come through."
Don't ask yourself what your dream job is, De Valk advises. A better question is: "What motivates me?" "Look back to when you were really 'in the zone'," she recommends. "When were you happy in work? When were you engaged? What were the attributes of that job that really pushed your buttons and energised you?" She recommends the approach of the US academic Edgar Schein, who pioneered the concept of "career anchors" (core motivations such as desire for autonomy, security, technical competence etc) to help identify new careers. "Take control back over your future." Also look at the newlifenetwork.co.uk (a website devoted to post-redundancy life) which has a "four-point plan for rebuilding your life after redundancy".
A trend in the current economic downturn is for those who have lost their jobs to set up on their own. "Setting up a business now is like doing it at any time but with a slightly increased sense of urgency," says Harry Rich, chief executive of Make Your Mark, a national programme designed to encourage enterprise. "If you have the right idea and you do it in the right way you can make it successful."
Consider retraining
A recent survey by the Learning and Skills Council last month found that over half of people were anxious about their job prospects (57%) and two-thirds felt a new skill would improve their lot and make them feel more secure. There could be more and better opportunities than you think. Ministers recently put pressures on colleges to spend some £120m helping "middle-class professionals" who lose their jobs during the recession so that they can study for a masters' degree or business qualification while they are out of work.
Explore every avenue
"People should look to their employer before they hit the streets," says Mike Emmott, employee relations adviser at the Chartered Institute of Personnel and Development (CIPD). If you are still in work, then your employers could pay for sessions with recruitment consultants as well as courses in networking, job-seeking and managing finances. "Employers have a different attitude towards redundancy than they did 10 years ago," says Emmott. In the 1990s there was, in his words, "a lot of macho stuff about who could declare the biggest redundancy". "Companies felt it reinforced the share price if they were prepared to take tough action. Employers are now conscious that there is a 'public reputation' issue about the spirit in which they deal with redundancies." According to the CIPD, the average redundancy costs employers £16,375, so paying for recruitment advice is small change.
Don't forget to talk to colleagues and old work friends. "Most people get jobs through informal means rather than responding to job advertisements," says Emmott.
Brush up your CV
"A rule of thumb for CVs is no more than two sides," says Kevin Green, chief executive of the Recruitment and Employment Confederation. "Keep it succinct. Start with the most recent job and don't worry too much about hobbies. Emphasise the impact you've made on your organisation." Don't talk about the old job, he cautions, rather about "what you achieved within the old job".
Green reckons that being made redundant is no disadvantage in interview. "You recognise, particularly in the current economic climate, businesses sometime have to cut their cloth accordingly," he says. Green reminds candidates to cover the old chestnuts. "What are the highlights of your career? Where have you made a difference? What do you perceive your weaknesses to be? Be clear about why you want your new job. I have interviewed many people over the last 20 years. Sometimes you ask that question and they stare at you blankly".
Just the job: Where to find further advice and information
Counselling The British Association for Counselling and Psychotherapy (bacp.co.uk), the British Psychological Society (bps.org.uk) or
the Samaritans (08457 909090, samaritans.org)
Legal advice For a guide to the law, see adviceguide.org.uk. For information about finding legal advice, see citizensadvice.org.uk, lawcentres.org.uk and lawsociety.org.uk
Redundancy payment calculator Use the ready reckoner at berr.gov.uk
Payment protection insurance See the Association of British Insurers (abi.org.uk)
Welfare benefits Go to jobcentreplus.gov.uk and adviceguide.org.uk
Managing debts Council of Mortgage Lenders (cml.org.uk), National Debtline (0808 8084000, nationaldebtline.co.uk), the Consumer Credit Counselling Service (0800 138111, cccs.co.uk) or Citizens Advice (citizensadvice.org.uk)
Careers advice See careersadvice.direct.gov.uk (helpline 0800 100 900) and newlifenetwork.co.uk. For information about starting a business, see makeyourmark.org.uk or businesslink.gov.uk
Retraining Contact your local Jobcentre Plus or college. Courses are listed at direct.gov.uk.
The Learning and Skills Council has a helpline (0800 011 3030 lsc.gov.uk/inourhands)
Job-huntingJobcentre Plus has a guide (Finding a Job). To find an appropriate recruitment agency, visit rec.uk.com/jobseeker.
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