Marvin OnumonuWEALTH at work suggests that using redundancy payments for debt repayment or mortgage overpayment might be beneficial, depending on individual situations.
This comes after the recent CIPD’s Labour Market Outlook, which revealed that 25% of employers planned to make redundancies in the early months of 2025.
WEALTH at work outlined key areas to consider for those made redundant.
Employees may be entitled to redundancy pay, which depends on factors like age and job tenure.
Taxation on redundancy payments means the first £30,000 is tax-free, but amounts over this are taxed at the marginal rate.
Reviewing financial positions, assets, and liabilities is crucial for planning expenses, according to WEALTH at work.
Employees close to retirement might consider retiring earlier, while also checking what happens to their workplace pension if they are laid off.
They advised caution against scams and suggested thorough checks on investment firms before any money transfers to ensure they’re FCA-regulated.
Jonathan Watts-Lay, director at WEALTH at work, said: “For organisations that are making redundancies, it’s really important that the workforce receive the appropriate support so they understand how it will impact their finances.
“It can be a really difficult time and it is crucial that they get help around areas such as how to budget, manage debt and cut down on spending and bills.”
Watts-Lay added: “People need help when they are told they are losing their job, and it’s encouraging that many leading companies already have redundancy support programmes in place and providing financial education, guidance and investment advice for their staff to help them navigate these issues at a time when financial wellbeing is so important.”
