Can You Claim Benefits If You Are Made Redundant?
By
HuutiMoney
The loss of a job during times of high living costs can be a matter of worry for an individual. This is why we are going to answer the question of whether you can claim benefits if you are made redundant in the below blog post. In addition to this, we will also explore if you can claim compensation from your employer when you are made redundant and if there is any support that you can get as you search for a new source of employment.
Can You Claim Benefits If You Are Made Redundant?
Yes, you can claim benefits if you are made redundant. Since losing a job to redundancy will have an immediate impact on your income, you would qualify for income-based, means-tested welfare benefits that can provide you with financial support while you are on a low income.
At the same time, you will also be expected to look for work. Therefore, the benefits you claim will carry an element of classifying you as a job seeker.
For instance, while you will be eligible for Universal Credit when you are on a low income due to being made redundant, you will also be asked to agree with your work coach on the number of hours that you will spend in your employment search.
Similarly, if you qualify for income-based Jobseeker’s Allowance or income-based Employment and Support Allowance, your claim to monthly benefit payments will depend on your commitment to looking for a job as well as evidence to support your commitment.
Welfare benefits that you can claim by being made redundant include the following:
- New Style Jobseeker’s Allowance
- New Style Employment and Support Allowance
- Universal Credit
- Pension Credit
However, there are certain conditions that will apply for each benefit to be claimed. For instance, in the case of JSA, you should be under State Pension age, unemployed or working for less than 16 hours per week. Additionally, you should have made sufficient National Insurance contributions over the recent 2 to 3 years.
In the case of New Style Employment and Support Allowance, all of the above conditions will remain applicable; additionally, the claimant must be able to provide proof of a disability or health condition that has an impact on the number of hours that they are able to work.
In order to claim Universal Credit, you or your partner are required to be under State Pension age and have saving equal to less than £16,000. If you get Redundancy Pay from your employer, it will count as capital when your means-test is carried out for a Universal Credit claim.
For Pension Credit, both you and your partner should have reached State Pension age. Otherwise one of you should be claiming Housing Benefit for people above the State Pension age.
If you were claiming any other benefits than the ones listed above prior to the loss of your job, you may be able to continue claiming them. In fact, in some cases, you may be able to claim additional elements to pay for increased expenses while you are on a low income.
In addition to benefits claim, you may also be eligible for an income tax refund after being made redundant and until you are able to find another job.
Can You Claim Compensation From Your Employer If You Are Being Redundant?
Yes, you can claim compensation from your employer if you are being made redundant. To claim Redundancy Pay, an employee should have worked for their employer for at least 2 years before they can claim compensation for being asked to leave their job.
The official term is Statutory Reduncay Pay which requires employers to pay eligible employees the legal minimum amount as compensation for being made redundant. However, if your employment contract states the amount that you can expect for being made redundant, you will be able to claim it from your employer. This is termed Contractual Redundancy Pay.
While your employer cannot pay you less than the legal minimum rate, if your contract states a higher amount, they will be bound by law to pay you accordingly.
In addition to this, if you have unclaimed holiday pay, your employer will also be required to pay that you when you leave the job. The first £30,000 of the amount you get from your employer while leaving the job in such a case will be tax-free and you will not be required to make a National Insurance contribution on it as well.
If your employer refuses to grant you your Redundancy pay, you can file a complaint against them with the Advisory, Conciliation and Arbitration Service
Can You Get Help In Getting A Job If You Are Made Redundant?
Yes, you can get help to look for a job or get essential training as you search for one if you are made redundant or at risk of being made redundant in the near future.
The Jobcentre Plus Rapid Response Service can help you:
- if you believe that you are to be made redundant
- while you serve your notice period
- up to 13 weeks after you’ve lost a job due to redundancy
The service can help you with the following:
- writing or updating a resume
- looking for a job that meets your skills and qualification
- guiding you and getting information on benefits you can claim
- searching for the right training(s) and acquiring new skills
- organising work trials (if you’re eligible)
- arranging additional extra help at work if you’re disabled
- claiming money if you are eligible for help with costs for travel, childcare, tools or equipment
You can contact the Job Centre Rapid Response Service via email at rrs.enquiries@dwp.gov.uk
Conclusion:
The above discussion has clearly outlined that you can claim welfare benefits if you are on a low income as a result of being made redundant from your job. Not only this, but you can also claim Redundancy pay from your employer as well as claim any dues that they may owe you. meanwhile, you can also get state help in training for and looking for a job that meets your skills.
FAQs: Can You Claim Benefits If You Are Made Redundant?
Does Universal Credit take into account redundancy?
Yes, Universal Credit takes into account your redundancy being the reason for having a low income. At the same time, any compensation that you get from your employer such as a Redundancy Pay will count as capital for your means-test in connection with your Universal Credit claim.
Do I need to tell HMRC if I am made redundant?
Yes, you should inform the HMRC if you are being redundant as this is a change of circumstances that will affect your income as well as tax credit payments.
How much redundancy pay is tax-free?
The first £30,000 of your redundancy pay is tax-free. However, if you get non-cash benefits as part of your redundancy package such as a company car, the cash value of such items will be added to your monetary compensation for tax calculation purposes.
What benefits can you get if you resigned from your job?
If you resign from your job on professional terms and are able to provide evidence for having sound reasons for leaving your workplace, you may be able to claim the following benefits:
- New Style Jobseeker’s Allowance
- New Style Employment and Support Allowance
- Universal Credit
- Pension Credit
Will I get paid if I resign with immediate effect?
Yes, even if you resign with immediate effect, your employer is supposed to pay you for the days and hours that you have worked until the time of your resignation. There may be exceptions only in cases where it is categorically mentioned in the employment contract that a resignation without notice may lead to reductions in the amount due for payment to the employee.
References:
Being made redundant: finding work, claiming benefits and managing debts – GOV.UK
Benefits and tax credits when you’ve lost your job | MoneyHelper
Preparing for after redundancy – Citizens Advice