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Facing redundancy

Find out more about what you can do if you are facing redundancy and which benefits you may be able to claim.

1. Are you being made redundant?

It is important to know the difference between redundancy and dismissal as it can have an impact on your benefit entitlement.

You are being made redundant if you are losing your job because the job will no longer exist or your employer needs less people to do the work – this can happen if your employer is reducing their workforce or if they go out of business. You can volunteer for redundancy if this is offered to you or you may have no choice.

If you are being dismissed from your job because of your conduct or performance, whether you dispute this or not, then you are not being made redundant.

2. What benefits can I get after redundancy?

If you have been made redundant, help may be available to you, depending on your income, savings, health, family and type of accommodation. To check your benefits entitlement quickly and easily, use the Turn2us Benefits Calculator.

You might find you are entitled to:

You might also qualify for assistance from a Local Welfare Assistance scheme, depending on your circumstances.

If you were receiving Working Tax Credit when you were working, you will no longer be entitled to it if you (and your partner if you have one) aren't working enough hours, but a four week run-on period may apply.

3. Sanctions after redundancy

If you claim Jobseeker's Allowance or Universal Credit and the decision maker thinks that you left your previous job voluntarily or you were dismissed due to ‘misconduct’ they can apply a sanction. This means that you receive no benefit or a reduced payment for a period of time decided by the decision maker.

However, if you are made redundant or volunteer for redundancy during a redundancy situation at work, then you should not be sanctioned for this.

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 job you have been doing, then you should not be sanctioned for this. 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.

If a sanction is imposed when you make a Jobseeker's Allowance or Universal Credit claim after being made redundant, or taking voluntary redundancy, you can appeal against the sanction decision. See our Challenging Department for Work and Pensions decisions guide for details of how to do this.

4. Will my redundancy pay affect my benefits entitlement?

Redundancy payments are treated as capital for means-tested benefits. If your redundancy payment takes your capital to over £16,000 and you are under State Pension age, then you are not entitled to means-tested benefits (except maybe second adult rebate for Council Tax Support if your local authority offers this as part of their scheme).

If your redundancy payment takes your capital to between £6,000 and £16,000, you may be entitled to means-tested benefits, however, it is assumed that you receive some income from your capital and your benefit amount is reduced as a result.

Contractual redundancy pay is treated slightly differently for Jobseeker's Allowance. The statutory redundancy payment is deducted from the contractual redundancy payment and the difference is ignored completely. For other means-tested benefits it is still treated as capital.

Pay in lieu of notice and holiday pay will be treated as earnings for Universal Credit in the assessment period in which they are paid.