Think you might be about to lose your job? You could be right. The UK's companies aren't exactly in a hiring mood. A survey out this month from Lloyds shows that the balance of firms expecting anything good to happen - better activity of some kind, rising sales, rising orders, rising profits has plummeted since the last survey six months ago. At the same time, the number of the unemployed has slowly begun to rise as the construction, real estate and financial sectors have dumped staff by the thousands and opportunities elsewhere have evaporated.
Why many people could soon find themselves without jobs
Obviously no one is hiring new derivative traders or estate agency negotiators these days. But they aren't much interested in hiring waiters or retail workers either: note that numbers out later this week are forecast to show that retail sales as a whole fell over 2% in June, while the demand for commercial property and shop space in particular is says the Royal Institute of Chartered Surveyors plummeting.
So there you have it - if you are an estate agent, an unspectacular financier, a shop assistant, a mortgage broker, a wine waiter anywhere except for Pizza Express (where sales are apparently holding up well as miserable punters downgrade from fancier restaurants) or a presenter on Location Location Location, there is a good chance that you will soon be out of work.
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The same might go for you if you work in any of the UK's army of small companies. According to the Forum of Private Businesses, small and medium sized companies are beginning to suffer severe cash flow problems as their big customers delay paying them. 82% of FPB members say late payments are going up and nearly 70% say this is costing them anything from £1000 to £25,000 says the FT.
Not all small businesses will survive this kind of treatment, particularly at a time when the cost of their overdrafts and loans is rising fast. Indeed according to insolvency specialist Begbies Traynor, the second quarter of this year saw a 29% rise in companies facing "critical problems." Overall, we can, according to the Ernst & Young Item Club, expect the unemployment rate in the UK to rise from its current rate of 5.2% to more like 7% in the next few years. Capital Economics goes further it's predicting 8%.
What to expect if you're being made redundant
So what if you find yourself in line for redundancy? The good news is that you will get a notice period, which you will either be asked to work during or be paid for anyway. This will be in your contract but regardless of that, you should still get at least one week for every year worked up to a maximum of 12 weeks. You'll also be entitled to redundancy pay, if you have worked for your employer for more than two years (and you are between 18 and 65).
The bad news is that the statutory payment won't keep you going for long. You get half a week's pay for every year of service to your employer between the ages of 18 and 21, one week's pay for every year between 22 and 40, and one and a half weeks' pay for every year between 41 and 64. That might sound ok, but if you are in a reasonably highly paid job, it won't add up to as much as you might like. There is a limit to the applicable weekly wage of £330 and a limit of 20 years of entitlement. The result? The absolute maximum you can get under the statutory scheme is currently £9,900 (20 years worth of 1.5 times £330) an amount that, while not to be sniffed at, might not feel like much compensation for losing a job you've had for a couple of decades.
Still, on the plus side, most employers do offer more than the statutory redundancy pay and anything you get under £30,000 will come to you tax free (something that doesn't happen often these days). And you can reduce your tax bill on a large lump sum further by dumping some of it directly into your pension fund. Employers in some sectors are also increasingly seeking to ease the pain when they make large numbers of people redundant, so you may end up with the services of an outplacement counsellor who, with a bit of luck, can help you find a new job.
The upside to being 'let go' during a financial crisis
Finally, says Anthony Hilton in the Evening Standard, its worth remembering that there is an upside to being "let go in bad economic times:" it is considered to be a "reflection on the market not on the individual" and so comes with much less stigma than in the good times. This, says Hilton, might explain a new City trend recently highlighted by Travers Smith "a marked fall off in the number of people taking former employers to court for wrongful dismissal." Employees no longer feel the need to prove that they have done no wrong: instead they are gratefully accepting their payoffs and "moving on."
The next question is, of course, moving on to what? While you try and figure out the answer to that one, the best thing to do with the cash however large or small a lump it is is to stick it in the highest earning instant access savings account there is and leave it there. After all, you have to live off it until you get a new job and that may not be a quick process. So you can't afford to take any risks with it.
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