Redundancy is a life-changing event, but applying for voluntary redundancy can be even more daunting because, while it can offer a fresh start if your job doesn’t offer the challenges and inspiration you need, you may also worry if you’re doing what’s best for your future career and finances. It may help to take stock of your career path to date and to research other career options before you take the plunge and apply for voluntary redundancy.
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Employers sometimes offer a lump sum payment, known as an enhanced redundancy package, as an incentive to employees who apply for and are accepted for voluntary redundancy. This often exceeds standard redundancy payments, which are based on the number of years someone has worked for a company. As of 2011, redundancy payments of as much as £30,000 are tax free.
Voluntary redundancy can give an older person the opportunity to take early retirement or take on part-time work to ease himself into retirement. Boost your retirement fund and make your redundancy cash go further by investing some of it in an ISA (a tax-free savings account) or a government-backed National Savings and Investments scheme – financial products, such as premium bonds, offer a guaranteed return, and your money is secure.
Embracing the New
Voluntary redundancy can be a Godsend to people who want to start their own business, return to full-time education or embrace a new career. You can set aside money for retraining, business start-up costs or tuition fees.
Time is money but, if you are in a dead end job and see no future with the company you work for, voluntary redundancy can offer a financial cushion, buying you time and freedom to decide on a career that’s right for you. If you’ve always wanted to travel, plan to start a family, or want to spend more time with your children, voluntary redundancy can make this possible.
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- HM Revenue & Customs: Redundancy
- Careershifters.org: Should I Take Voluntary Redundancy Before I Have A clear Plan for What I Will Do Next?
- Business Link: Making an Employee Redundant
- Working Rights: Voluntary Redundancy: How Long Before Benefits Claim?
- Directgov: Main Ways to Save or Invest Your Money