Ten ways to survive redundancy

I guess it's unfortunately commonplace in these troubled economic times but I have a few friends that have gone through the ordeal of redundancy lately.  In many cases the dreaded chop hasn't been expected and the troubles at their companies haven't been well documented internally, so the sack has come as both an emotional and financial shock to the system.  Whilst some companies offer excellent support for those made redundant in many other circumstances people are left very much to cope for themselves.  After a decade of steady economic growth its a position that is alien to many and it can be disorientating coming to terms with your new situation.  There are things you can do though to make things a little bit easier.  We recently launched a redundancy support service and in conjunction with that, here are ten tips to help you survive the chop.

1. Check your redundancy entitlement

Getting the redundancy pay-off you are entitled to can buy you valuable time to get back on your feet.  You qualify for a minimum payment after two years employment.  It can get a bit complicated working out the exact legislation but there are a number of calculators that will help you work out your legal dues.  The Times have a very good one.

2. Beware of any tax obligations

The first £30k of redundancy pay is free from tax but after that it is added to your earnings for the year and taxed at the higher rate.  Obviously nice if you're getting that kind of payout but something to bare in mind to prevent any unexpected visits from the tax man.

3. Be careful how you arrange your exit

As befitting most tax related things it's seldom straight forward, and to qualify for the above tax free payment you must have been made redundant.  Things like gardening leave aren't covered.  It's pretty complex but as part of the redundancy service we have a free legal helpline to help you navigate the minefield.

4. Get some tax back

It's always particularly pleasing to get tax back, and if you've been dismissed part way through the year you may well be eligible for one.  Make sure you get your P45 and get in touch with your tax office.  The legal helpline mentioned earlier are on hand should you need a helping hand.

5. Minimising tax on > £30,000 payouts

If you're fortunate enough to have such a healthy redundancy package you can minimise your tax payout by paying the excess into your pension.  You can typically pay around £200,000 into your pension but if in any doubt get some expert advice.  Did I mention we had some free legal help at hand?  Got to keep them busy havn't you.

6. Don't rush into anything

It's very easy when you've had a shock such as redundancy to leap into a rash decision.  Now's not the time to buy that sports car or invest in a vineyard somewhere in Provence.  It's perfectly understandable of course, you're feeling low, you have a nice cash sum (hopefully) and what better form of pick-me-up than some retail therapy.  Well don't.  Walk away from the credit card.  Use your brain rather than your heart.

7. Reorganise your budget

We all hope to get back on our feet as quickly as possible but with the market as it is, finding a new job is no guarantee.  It pays to take a long-term approach to your finances and plan accordingly.  In our segment on reorganizing your finances three steps are suggested.

1. Calculate your current essential living costs.  That doesn't include your new sports car (that you've resisted the urge to buy, right?)
2. Balance these outgoings against any incomings you may have, either via state benefits or things like interest and investments
3. Try to cut the fat from your outgoings to balance the books.

8. Prioritise your spending

Figuring out which items of your weekly budget are crucial and which aren't is often as difficult as working out which items you'd happily live without and send to the charity shop or the car boot sale.  A good tip I've found is rather than cutting things completely is to make better use of what you do use.  Could you do any of these to cut your outgoings?

• Make sure you use energy as efficiently as possible.  No appliances on standby or lights left on in un-occupied rooms can really cut your bills
• You can cut your phone bills by using services such as Skype to talk to people over the web (for free).
• Gyms can be expensive things.  With the evenings getting lighter could you go for a run or bike ride instead

9. Develop a career strategy

Sometimes redundancy can be a blessing in disguise.  We are often creatures of habit and inertia can stop us following our dream.  Now you've been made redundant it can be the shock to the system required to get you to make that leap.  Now's the time to reassess and think about what you really want from life.

• Could now be the time to go back to school?
• Could the lack of work give you the opportunity to move, or even travel?
• Have you dreamt of changing career?
• Devote the time to self improvement

10. Beef up your CV

If you've been employed for a while you may not have thought about your CV in some time.  Now's the time to dust it down and think about how to make yourself as employable as possible.  Seth Godin provides some typically excellent tips on how you can make fine use of your new found free time.  Network, improve your LinkedIn profile, do some volunteer work, learn new skills.  Lots of things you can do to make you more employable.

Anyway, they're our 10 tips to help you survive redundancy.  If you're in this unfortunate position, do check out our redundancy support service, and if you have any other tips or feedback do leave a comment below.