How Being Made Redundant Can Make You Some Money

Article Category: Finance  |   

Redundancy! It\'s a word that can bring on a cold sweat. For most of us, our lives revolve around our jobs. When the company you work for decides that you\'re for the chop there are so many ways we can be affected.

Redundancy - job losses - photo

Our wages pay for our homes. They put food on the table. Cold, hard cash pays your transport costs that you incur when you travel to visit friends and family. Lose your job and you quickly realise how critical is was in helping you maintain what is considered a normal lifestyle.

Insurance may go some way to helping keep crisis at bay. Likewise, social security payments are there to ensure you can clothe and feed your family. But sometimes, being made redundant can actually provide you with an unexpected windfall. Here\'s how...

Redundancy Pay Out Schemes

I\'m not talking about government programmes designed to keep you afloat. Most companies have schemes in places designed to ensure you don\'t fall flat on your face in the event that you lose your job. It works like this: if you\'re made redundant you\'ll be entitled to a certain amount of money for every year that you\'ve worked for your employer.

In some cases, you can receive up to 3 months pay for every year worked. Here\'s a quick example: you\'ve worked for ABC Corp for 10 years. Your average take home pay is about $3,000 a month. In this case, you could expect a payout of about $90,000. A sum not to be sniffed at.

From time to time, companies change their policies which may alter the amount you\'re entitled to. However, in many cases, this means a change of contract. When your contract is changed you have to sign a new contract. If your company\'s redundancy scheme has changed for the worse make sure you check to see if you signed up to the new policy. If not, you should still be entitled to benefit from any older, more generous scheme.

Whilst this won\'t make you rich it\'s one way of getting your hands on a sizeable chunk of fast cash to keep you going whilst you look for a new job.

New Opportunities Open Up

How long have you been in your job now? More importantly, how comfortable have you become in your day to day tasks? Now look back to when you first started. How hungry were you? Were you ready to sweep away the norms as you forged a path up the management ladder? But what happened?

It\'s fair to say that, at some point or another, most of want to change the world. The beat that the rest of our work colleagues dance to is simply too slow for us and we\'re going to up the tempo. We are going to make people sit up and take notice of us because we are a force of nature. Sadly, even whirlwinds of activity eventually run out of steam.

That\'s why losing your job might be just the spur you need. If you\'ve found that your salary has stagnated over the last few years and you\'ve watched jealously as colleagues leap frog you in the promotion stakes then it\'s time for a reality check. Loss of your job could give you the focus you need. Taking some of your redundancy pay out and investing in additional training or simply spending a few months working out why you lost your way could result in huge rewards in your next job.

One of the biggest concerns most people have when looking for a new job is their age. Sure, you might not be a spring chicken but you have years of experience and that knowledge can be put to very good use as an independent, highly paid consultant.

Final Salary Pension

Sometimes, you might not be made completely redundant. If you\'re facing a severe reduction in hours and you\'ve put in enough years you want to consider drawing your pension. You might not be quite ready to retire just yet but, in some cases, even partial retirement might be the godsend that you\'re looking for. Although companies have closed final salary pension schemes to new joiners you could still benefit. Obviously, you need to have been enrolled in this type of pension when you started your employment, so this is the first check you\'ll need to make.

Final salary pensions are, as you\'d expect, a pension plan guaranteed to pay you a figure that matches your salary on the last day of employment. These schemes cost employers an awful lot of money so it\'s easy to understand why they\'ve been closed to new starters. But you don\'t need to be fully retired to benefit. If you fancy a bit more time on the golf course or at home with the family then it may be time to consider semi-retirement.

Most companies now run schemes whereby employees can go into semi-retirement by reducing their work commitment. Along with a reduction in your working days comes a natural drop in salary. But, as you\'re officially in a form of retirement, you can start drawing some of your pension payments to cover the shortfall.

Now you might feel that is a pretty extreme way of making some money out of losing your job but let\'s look at it another way - now you don\'t have to wait until you\'re 65 to start enjoying your money. You still get to work, albeit at reduced hours, your company doesn\'t lose valuable experience and, best of all, you get paid for your \'time off\'. Everyone is a winner.

Written by James Redden

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Last update: 26 February 2013

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