Sometimes employers offer voluntary redundancy to avoid having to make compulsory redundancies. Being in this situation can have its benefits, but it’s important to weigh up all the pros and cons before taking voluntary redundancy.
Affording to take voluntary redundancy
Condider if you can afford to take voluntary redundancy.
On the surface, voluntary redundancy might seem like a great idea.
A lump-sum payout, which is usually bigger than what your employer is contractually bound to give you and the opportunity to do something different may sound good.
But it’s important to work out how much money you would have to live on.
Confirm your redundancy settlement
Start off by finding out exactly how much you’re going to get from your employer.
You should be offered a settlement based on:
- your age
- current salary
- the length of time you’ve been doing your job
The figure is likely to be higher than the amount you’d get as statutory redundancy pay.
Check if you’re insured to take voluntary redundancy
Next, check to see if you’ve got payment protection insurance on any of the following, which pays out if you lose your job:
- credit card
- short-term income protection insurance
Find out whether you’ll be covered if you take voluntary redundancy.
If you opt for redundancy rather than have it forced on you, insurance companies usually won’t pay out.
That means you’ll need to continue to meet your repayments each month – a big expense if you’ve no money coming in.
As soon as you stop working, get in touch with your local Jobs and Benefits Office to find out if you’re entitled to benefits if you take voluntary redundancy
If you’re claiming income-based benefits, what you’ll get will depend on your savings – including your redundancy package – and any other income you have.