Nobody wants to be made redundant. But when they are, it catches them almost completely by surprise and they usually don’t know what coping with redundancy means, as that is often the most important ‘next step’ i.e. the redundancy process.
This article explores the redundancy process, how redundancy works, some of the redundancy reasons, and how you can best cope with it with our career advice.
What is Redundancy?
Whether it’s redundancy for teachers or any other profession, the redundancy process is the same: when a business needs to downsize and let go some of its workforce as a result.
Many people believe that redundancy is an ‘unfair dismissal’. However, it’s important to remember that redundancy in itself is not the individual being eliminated but rather than the job role being eliminated.
Even though most people know how redundancy works, many overlook the fact that it shouldn’t be taken personally. But what is very important to oversee is that the redundancy terms should be clearly outlined in the contract – e.g. to better understand who pays redundancy when a business closes.
Redundancy Reasons: Why does Redundancy happen exactly?
There may be many reasons for the redundancy process, including:
- Closure of business
- Financial woes the business may be facing
- Location changes due to which all the employees cannot be accommodated
- Job roles becoming redundant due to rapid technological changes
- Closure of specific divisions or departments of the business
It should be noted, that dismissal due to lacklustre job performance or misconduct does not fall under redundancy. So, in that case, you will not receive a redundancy letter but a termination or dismissal letter.
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7 Common Reasons why Redundancy occurs
Coping with redundancy can be difficult for most people, although it’s important to understand why people are given redundancy letters to begin with:
1. The business is being sold
A buyout or acquisition happens when one business buys out or acquires another. The organisation or business which is being acquired often does this to strengthen their market position and to, perhaps, access new resources which they might not have been able to otherwise.
Unfortunately, the original business’s staff may have to face redundancy because a buyout/acquisition, in most cases, involves new leadership, new teams, and completely new strategies or ways of working. As a result, the acquiring business may lay off some of the workers from the original workforce, especially if the new staff is already adept at performing the same roles.
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2. Loss of funds
Businesses lose money all the time, especially when they haven’t been meeting their sales targets or when a key investor decides to pull out. If the business hasn’t been making a profit, it simply won’t have the funds to pay salaries and this can lead to layoffs.
Ultimately, the business may decide to cut its losses by eliminating certain positions which it believes to be less important than others, or where they feel they can do away with the said position without incurring a major intellectual or talent loss.
3. Outsourcing
The cost of recruiting, training, and retaining staff is something which usually goes up for all companies, no matter what their scale or sector.
Companies, therefore, often outsource expertise to save money and this means that they may have to make some of their in-house positions redundant. This is actually a favourable option for the company or business because it will no longer have to pay the insurance premiums or income taxes of in-house staff, for example.
4. Cancellation of projects
Organisations often recruit the expertise of specialised staff to meet the demands of a specific project. But if they abandon a project halfway, this could lead to staff dismissals to cover the loss.
In many instances, the organisation might try to transfer their staff members to other roles or responsibilities in order to cut down layoffs, but some transfers end up not being feasible as the employee(s) in question do not have the required skills and/or technical expertise.
5. Reduction in operations
Businesses may have to close off some of their operations and follow up with redundancies depending on what the demands may be at any given time.
For example, a food and beverage company that has two offices to oversee service callouts and send technicians for the maintenance and/or replacement of vendor machines, may close one of their locations, consolidating all operations into the other location.
Naturally, this might mean that the staff members at the closed off location will need to try their luck at applying for jobs at other locations within the same organisation or different roles altogether. But for those who are not suitable for either, will risk losing their job. Hopefully though, they will get redundancy holiday pay, at least!
6. Mergers
In one of the previous points, we briefly discussed acquisitions/buyouts. However, mergers – that is, when two independent organisations merge to operate as a single entity – are also one of the most common redundancy reasons.
Organisations might merge for a variety of reasons, such as to broaden their range of products, reduce tax, double down on industry competition, or boost profitability.
7. Cost cutting
Cost-cutting is another thing that makes many workers think “will redundancy pay affect benefits?”
At certain times, a business may have to pay off debts or incur a period of low sales. If this goes on for too long, it might have to balance expenses by laying off some of its employees. At other times, investors may seize their financial support, so the business ends up eliminating specific roles to save money.
Coping with Redundancy: Some Best Practices
Redundancy can be a very difficult thing to deal with – whether it’s redundancy on maternity leave, redundancy while pregnant, redundancy after retirement age in the UK, or redundancy due to ill health, for example – or the reasons mentioned above.
Either way, it’s important to see redundancy in a positive light and continue to look for work opportunities across different industries, while also acquiring new skills. People coping with redundancy have several options, so it’s important to explore these with an open mind:
- Look for a job either in the same industry or in a different one
- Apply for the same role or a new one according to your skills, experience, expertise, etc.
- Return to study in order to up your academic skills, including distance learning, part-time study, or higher education
- Consider a change of career where there’s better growth and lower chances of redundancy
- Work freelance or for yourself as a self-employed individual
- Do volunteer work to add additional skills and experience to your CV
- Consider working flexible hours, from home, part-time, shift-based work, etc.
- Consider working to a new area for work, including the possibility of moving overseas
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In the meantime, try not to make any hasty professional decisions. The following redundancy process tips can help you deal with the aftermath and plan your next steps accordingly:
Related: How to change careers
The Redundancy Process
1. Manage your finances
During the redundancy process, one of the most important things you must do is to effectively manage the money you have in hand and in your account.
Money is often a major source of worry, stress, and sleepless nights, especially following redundancy, so much so that finances and mental health have been linked in many studies. Worrying, however, isn’t going to solve anything and just lead to mental health issues, if anything else.
The first positive step should be to take control of your finances. Come up with a budget, even if you’re not sure where to start or what it should look like. You might get some professional help from the Money Advice Service, although many people tend to choose a predefined time each week to evaluate their bills and expenses.
So, start with that and also set aside the amount of money you can safely spend each week. Above all, stick to the weekly or monthly budget target!
2. Take a step back and re-evaluate things
Redundancy can be a major opportunity to make some positive changes in your life. So, this means you can come up with fresh strategies for your next career move or try to establish a better work-life balance – both of which can help you choose your next role and organisation. For instance, you may now prefer to have more flexibility or a shorter commute, compared to your previous role.
Furthermore, redundancy can give you the space needed to make some bold and drastic changes in your life which can prove to be incredibly beneficial – such as resuming education or making a career change.
No matter how difficult things may seem at the moment, it’s important to have a positive mindset and try to use the current circumstances to your advantage.
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3. Understand your rights
Understanding your rights under redundancy are very, very important! For example, who pays redundancy when a business closes is an important aspect to understand. Or, whether you are in a position to make a redundancy appeal or not, based on the terms of your contract. At times, you may find yourself wondering ‘will redundancy pay affect benefits’ – so, in any case, you need to be familiar with your rights.
As long as you are legally classed as an “employee” in the contract, and have worked in the organisation for at least 2 years, you are entitled to certain redundancy rights.
4. Unclaimed benefits
The redundancy clinic webcast is worth looking into as it details the support and services available, as well as information on redundancy benefits.
5. Use a careers service
Most people who are familiar with how redundancy works also know that there may be benefits entitlement as long as the eligibility criteria has been met. Your local Jobs and Benefits office can provide more information.
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6. Consider updating your CV
Take a good look at your CV. Are there skills, achievements or any experience which you haven’t updated on your profile?
Be up front about your redundancy and include the latest experience first. Make sure to update your LinkedIn and other social media profiles too and mention those on your CV.
Read more: What Makes a Good CV: 15 CV Writing Tips
Conclusion
If you just got a redundancy letter, don’t panic!
It could be a chance to step back, re-assess things and explore other opportunities which could lead to something big.
As long as you know how to make the best of redundancy, this could be the stepping stone you need to have something much better than you anticipated.
FAQS
Coping with redundancy emotionally involves acknowledging your feelings, seeking support from friends and family, and considering counselling or therapy if needed.
The five stages of redundancy are typically: shock, denial, anger, depression, and acceptance. These stages represent common emotional responses to job loss.
Adapting to redundancy involves updating your resume, exploring new career opportunities, acquiring new skills, and networking to find a new job or consider alternative career paths.
To recover from redundancy, focus on self-care, maintain a routine, set achievable goals, and stay persistent in your job search or transition to a new phase in your career. Consider seeking career counselling or retraining programs if necessary.
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Nick Cooper
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