Voluntary Redundancy: How Long Before Benefits Claim?

Q.

If I take voluntary redundancy how long is it before I can sign on and receive any benefits?

A.

Unfortunately, the issue of redundancy and claiming benefits is gaining speed with the current global economic crisis, so you are right to look into the facts before you commit.

It is worth taking stock of your overall situation before you take voluntary redundancy – both financial and emotional – as there are a number of issues than run parallel with your ability to claim benefits.

A New Opportunity?

It is a good idea to think about how happy you are in your job, the long term stability of the company you work for, your total household income and the security of your partner’s job.

If, say, you don’t really love your job and were thinking about leaving anyway, especially if you were planning to go freelance or self employed or start your own business, taking voluntary redundancy can actually be a really positive step. You get a lump sum and some paid time off, essentially, and often access to training courses, careers advice and all sorts of other ‘perks’.

With regards to claiming job seekers allowance and other benefits after taking voluntary redundancy, the situation is pretty complex. Without knowing the exact details of your financial situation, including that of your total household, it is hard to be able to say what you would or wouldn’t get, but we can certainly take an overview.

For detailed advice for your personal situation, you can ask to speak to an advisor at your local Job Centre before you decide to take voluntary redundancy. You can also go onto the website for the Government’s Department of Work and Pensions to get advice and see what you may be entitled to in terms of benefits.

Facts and Figures

It is worth remembering that job seekers allowance and many other benefits are means tested, so if you have a great stash of savings (currently the threshold is over £16,000) you are unlikely to be able to claim anything, other than benefits which many people can claim like child tax credits.

It is common for voluntary redundancy to include a lump sum payment and then a number of months (often 12 months) fully paid. While you can sign on as unemployed straight away, if you wish, you are unlikely to be able to claim job seekers allowance or other benefits, such as housing allowance, until the period of time that you have effectively been paid for is over (e.g. 2 months) regardless of how much of the money you actually spent, or what your salary was.

Think about what your long term future is with the company and what you could do instead, rather than simply focus on claiming benefits, and you may find that taking voluntary redundancy is an interesting prospect.

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