There are usually signs of an employer finding trading conditions difficult. In the short term that may not affect you at all, but it’s wise to be aware of what your rights are should job cuts be announced.
What are the signs?
A struggling business will have put a number of cost-saving measures in place well in advance of enacting any staff cuts. Hiring freezes (including not replacing leavers), no annual pay rises, no upgrades to technology or equipment, and calls coming in from creditors chasing overdue invoices are indications that all is not well.
It could just be a temporary cash-flow issue, but you should ensure your CV is up-to-date before any bad news hits, not after. This is also your chance to review your career and consider if this is an opportunity to make a long overdue change.
Redundancy
If voluntary redundancies won’t sufficiently reduce the workforce, a company will announce a programme of compulsory redundances. You may be eligible for certain things including:
• Redundancy pay
• A notice period
• A consultation with your employer
• The option to move into a different job
• Time off to find a new job
Your employer may well offer you better leaving terms than their statutory obligations, but otherwise you will need to have worked for your employer for a continuous period of two years, with the amount due being based on your weekly pay, age, and the length of time that you’ve worked at the same place.
It’s worth checking your employment contract well before any bad news lands.
Administration
Many companies go into administration rather than liquidation, which means that it’s not necessarily the end for the business.
Companies can be restructured and sold on as a going concern, with staff being transferred over to a new employer under strict protective regulations.
If this happens, the first fourteen days are crucial for employees.
- If you’re made redundant during this period, you become an ‘ordinary creditor’ and are placed at the bottom of the list for payment.
- If you’re retained as an employee after the initial fourteen days, this makes you a ‘preferential creditor’ and puts you in a better position financially if you’re made redundant later on.
Liquidation
In the case of company liquidation where the business stops trading, all employees are made redundant and those eligible for statutory redundancy pay will claim their entitlement through the National Insurance Fund. Note that regardless of what your contract said, you will only be entitled to statutory payments.
Your employer will have appointed an insolvency practitioner who will normally send you all the forms you need to claim any money you’re owed. If this doesn’t happen, you can contact your employer’s insolvency practitioner, who will advise you how to claim payments from the NI Redundancy Payments Service and HM Revenue and Customs (HMRC).
What next?
Whilst it’s natural to want a bit of time to assimilate the news of possible changes to your working life, you should get your CV out to recruitment consultants or other companies in your industry sector as soon as you can.
