5-minute guide to redundancy and getting financial help

If you’ve recently been made redundant, financial help could be available, depending on your income, savings and other factors. Linda Gyamfi, Welfare Benefits Specialist at the charity Turn2us explains more about the support you may be able to claim.

Redundancy pay

If you are an employee and have worked for an employer continuously for two years or more and are made redundant, you should qualify for Statutory Redundancy Pay – calculated on your weekly salary, length of services and age.

Some employers will offer redundancy payments which exceed the statutory amount, known as a contractual redundancy payment.

Redundancy payments are treated as capital for means-tested benefits so can affect your entitlements. If your redundancy payment takes your capital to over £16,000 and you are under state pension age then you will not be entitled to means-tested benefits like income-based JSA and Housing and Council Tax benefits but you may be able to claim contribution-based JSA.

If your capital is between £6,000 and £16,000, you may be entitled to some benefits but the amount will be reduced.

Jobseeker’s Allowance (JSA)

If you are made redundant, you may be entitled to JSA. This is a benefit for people who are not in full-time employment, are capable of working and are looking for a job. You must be under state pension age and usually aged over 18 to qualify.

There are two types of JSA:

  • Contribution-based JSA can be received for up to six months if you have paid enough national insurance contributions
  • Income-based JSA may be awarded if your income and savings are low enough, but if you have a partner they must either not be working, or working fewer than 24 hours per week, for you to qualify.

If you are working under 16 hours, or your partner is working under 24 hours, the amount of Jobseeker's Allowance you can get will depend on your earnings.

Redundancy or dismissal

It is important to know the difference between redundancy and dismissal as this can have an impact on your entitlement to JSA. For example, if you left your job voluntarily or were dismissed due to misconduct, a sanction can be applied. This means that you will receive no JSA or reduced JSA for a period of time. However, if you are made redundant or volunteer for redundancy, you should not be sanctioned.

If you are offered another job by your employer as part of your redundancy and you decide not to take the job as it is not equivalent to the one you have been doing, then you should not be sanctioned. You may also try out a new job in this situation for up to four weeks without losing your redundancy rights if it does not work out for you, and you follow correct procedures for updating your employer about any changes and giving notice.

Housing Benefit

Another benefit you may be entitled to after redundancy is Housing Benefit. This is paid by your local council to help with your housing costs if you are on a low income.

  • You have to be liable for paying rent to qualify, and it does not matter whether you are a private rented tenant or a social tenant.
  • If you live with a partner, only one of you can claim Housing Benefit.
  • Housing Benefit does not cover a mortgage, but if you are a home owner you may be entitled to other benefits to help towards your housing costs.

Council Tax Support

You may also be eligible for help towards your Council Tax bill. This help varies according to which part of Great Britain you live in, as England, Scotland and Wales offer different schemes, so what you may receive depends on what your local authority provides.

Checking entitlements

There are other welfare benefits you may be entitled to after redundancy depending on your personal circumstances.
You can use the free Turn2us Benefits Calculator to check which benefits you are entitled to, the amounts you may receive and how to make a claim.

Further information about redundancy rights and pay is available on the Gov.uk website.

* Read our top tips on getting a job after 50 here. Plus how to start a franchise at 50-plus here.