The Salary Calculator

Back in February, redundancy intentions rose to their “highest levels” in the last ten years, outside of the pandemic. By May, one in four employers shared their expectations to make redundancies in the next three months. Fast forward to August, and Bank of England data showed that this summer, British businesses cut employment at the fastest pace in four years.

September continued this trend, with reports that business confidence had dropped to record low levels.

Against the backdrop of a challenging economic landscape, it’s important to be aware of your rights and prepare for potential job loss. This week at The Salary Calculator, we’ll help you do just that, exploring:

• The rise in redundancies 
• What legal protections are in place?
• How to best navigate redundancy

The Rise in Redundancies 

Last month, the Bank of England’s Decision Maker Panel survey of 2,126 companies revealed that from May to August, companies reduced their headcount by 0.5% — the fastest rate since 2021.

Of those surveyed, just under half (46%) said they had cut jobs due to increases in national insurance (NI) contributions, which rose to 15% in April.

A recent report from KPMG and REC echoed similar findings, reporting the “steepest upturn in candidate availability since November 2020” in the shadow of falling vacancies and redundancies. 

Alongside tax-driven redundancy decisions, Acas research shows that this year, workers have also been worried about the impact of AI on jobs. Back in April, more than a quarter (26%) shared concern that AI will lead to job losses.

So how do these fears match up with the figures? It’s complicated.

While at the beginning of the year, a World Economic Forum paper reported that 40% of employers anticipated reducing their workforce where “AI can automate tasks,” an Orgvue report in April found that 55% of UK businesses actually regret AI-driven redundancy decisions.

But whether tax or tech-related, from hospitality and construction to journalism and healthcare, few sectors have been untouched by job cuts this year.

What legal protections are in place?

As the job market cools and with an uncertain outlook ahead, it’s important to understand what legal protections are in place if you’re faced with redundancy.

“Understanding what you’re entitled to, like redundancy pay or notice periods, can help you plan your next steps with confidence,” said Thomas Gibbons, an adviser at Money Wellness, an organisation commissioned by the government’s Money and Pensions Service to provide free money, debt and income maximisation advice.

And these entitlements will vary depending on how long you’ve been working with your employer.

At the very least, you’re entitled to one week’s notice if you’ve been employed for between one month and two years. However, this can go up to 12 weeks’ notice for 12 years or more, with one week’s notice for each year employed between two and 12. 

Likewise, your redundancy pay will be calculated based on your age, weekly pay and how long you’ve been working with your employer. 

If you’re an employee and have been working with your employer for at least two years, you’ll be entitled to some form of statutory redundancy pay, with the maximum statutory pay being £21,570 — up to £30,000 of total redundancy pay is tax-free. 

You can calculate your entitlement here.

It’s also important to ensure that your employer pays you for any unused holiday, overtime, bonuses and commission. 

Looking ahead, legislation is in the works to bolster these legal protections. Within the next two years, employers will face changes to the consultation thresholds for collective redundancy and increases in the penalty for failure to consult in collective redundancy, set to double from 90 days’ pay to 180 days’ pay. However, no changes to redundancy pay or notice periods are expected.

How to best navigate redundancy

In addition to equipping yourself with this knowledge, planning ahead will put you in good standing. 

“Facing redundancy can be daunting, but preparation is key to navigating it with resilience,” said Níamh Kelly, director of The HR Dept Shropshire, Wrexham & Chester and Mid Wales. “As a HR professional, I’d advise starting by reviewing your financial situation.”

Simon Trevethick, head of communications at StepChange Debt Charity, shared a similar sentiment: “If you find yourself in this situation the first thing to do is make a detailed budget to take stock of your future monthly income and outgoings. If you already have one, it will likely need revising.” 

StepChange has some useful budget templates to help you do this.

Trevethick noted that, on the income side, it’s important to work out how much money you have coming in from your old employer, how much you have available in savings, and if you are entitled to any benefits whilst out of work. 

“Once you have a clear budget, you’ll be able to reduce any unnecessary expenditure – this may seem drastic but could make the difference, and it won’t be forever. From here, set a strict budget over the coming 3-6 months so that you can cover essential costs,” he added.

“It’s important to contact your creditors as early as possible to let them know you’re facing redundancy”

“Even small actions, like safeguarding a bit of savings or considering short-term work, can make a big difference. Reaching out early is a positive step and can make the transition a little easier,” said Gibbons, adding that, if you need extra support, reach out to creditors early.

“Most are happy to discuss flexible options,” he advised.

Trevethick echoed this: “Too often, we see people wait until the point of crisis to reach out for help. It may seem daunting, but it’s important to contact your creditors as early as possible to let them know you’re facing redundancy. Whether it’s your mortgage provider, energy supplier, or bank – they deal with these kinds of issues every day, and can offer tailored support and options to get back on track.”

And for those struggling with debt, StepChange offers free, impartial, and independent debt advice. “Our online, expert backed service is on hand 24 hours a day 7 days a week to support you on your journey from financial difficulty back to financial health,” said Trevethick.

Alongside these financial measures, Kelly advised that upskilling or reskilling can also open doors to new opportunities, noting that investing in professional development is wise. 

“Redundancy isn’t just an end—it can be the start of a whole new career!”

Kelly explained that staying proactive by updating CVs, LinkedIn profiles, and reaching out to recruiters can help “maintain momentum.” But it’s also important to seek support, whether through networks, mentors, or career coaches, she said.

“As someone who was made redundant and then started their own business – I can honestly say redundancy isn’t just an end—it can be the start of a whole new career!” said Kelly.