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I Forfeited My Redundancy Pay for New Job: A Case Study

By: Emma Eilbeck BA (hons) - Updated: 8 Oct 2018 | comments*Discuss
 
Job Redundant Pay Employers Redundancy

Finding a new job shortly after being made redundant is something to celebrate, but if this means you lose some or all of your redundancy money this celebration can sometimes turn into misery.

Depending on how long you have been with a firm, most employers will offer you some form of redundancy pay, which in some cases follows on from a considerable period of consultation or gardening leave as it is commonly referred to. Problems can occur if you manage to find other employment within this consultation period, as this could make your redundancy invalid.

Being Made Redundant

Stephen was 31 and had been working at a bank for just over two years. He was shocked one day to be told that he was being put into consultation, which meant his current job had been made redundant but they were trying to find him employment elsewhere in the business.

“When I got the news, my initial reaction was to panic, I had a wife and a young child and I needed to keep the money coming in. Even though I was only in consultation I knew the writing was on the wall and that I was not going to be offered another job,” explains Stephen.

He was offered quite a generous redundancy packet and on top of his three months consultation period he was also offered three months redundancy pay.

“I knew I would be financially OK for at least another six months and this was reassuring,” he says.

Searching For a New Job

“I started looking for work straight away, it didn’t even cross my mind to think about what would happen to my redundancy money if I found another job,” says Stephen.

After several interviews Stephen was offered another job within one month.

“It was working at another bank and although the money was not as good as it was at my old job, I felt a weight had been lifted off my shoulders because I had found a new job.” explains Stephen.

He was on quite good terms with his old boss so he went to speak to him about the new role he had been offered. At first they had an informal chat about what would happen to his redundancy pay if he took on the new role.

“The new bank wanted me to start work within the month, which meant I would be starting employment one month before my current employment had ended which my employer said would mean I would lose all of my redundancy pay,” says Stephen.

Making a Decision

“The redundancy money I was being offered was not a small amount, it was three months of my wage and to receive it all I would have to do was to wait until the day my consultation period ended.

“On the other hand I did not want to risk not being able to find another job or losing the one I had been offered simply to receive my three months redundancy pay,” explains Stephen.In the end Stephen decided he would take the new job and forfeit his redundancy package.

“I always thought it would be a bonus to receive the redundancy pay and get a new job and the most important thing to me was always to find a new job as that offered longer term security,” he says.

It can be tricky deciding whether to accept a new job or to stick it out and receive your redundancy pay. You should weight up which option will be better financially. If you are forfeiting your redundancy pay for a job that only has a six month contract this may not be worth it. But if your dream job comes along then it would not be wise to let this slip by simply to gain a few months redundancy pay.

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[Add a Comment]
I am taking voluntary redundancy which is just under the £30k mark, so as I'm aware that I won't get taxed. I am due to leave my company on 31 March 2019 and I get paid my redundancy in my March salary. However, I am confused around tax if I was to start a new role, ideally, I'm looking to start a new job at the beginning of April. However, will my tax be impacted if I was to start a new role in April?
Banta, - 8-Oct-18 @ 2:09 PM
I was made redundant from a job I had worked in for 17 years when the company became insolvent in early Feb. I did not receive any notice or enter into consultation, it just happened one day. I claimed Universal Credit while searching for a job. I found and started a new within 4 weeks. I have now received my statutory redundancy pay but I am guessing I won't get anything for payment in lieu of notice? I would qualify for 12 weeks given my service but by the time the 12 week period is up I will have had some Universal Credit AND potentially two months salary (I earn more than £489 so this would be capped). Is it just a straight "what you are entitled to minus amount you have earned in the 12 weeks" calculation? It seems a bit unfair to not receive anything just because I cracked on and returned to work as quickly as I could.
danish78 - 20-Mar-18 @ 1:29 PM
Kipsy - Your Question:
My girlfriend has been offered a new job at the very respectable BNP Paribas.When she came to hand her notice in the CEO of her current employee stated that she was going to be made redundant with just over £5000 package.To add to the matter it further complicates things because she will be finishing his summer with her level 3 in accountancy , in which she is line for a merit at least or distinction.The dilemma is should she turn down a job with lots of room for progression , take the package look at temping / she has also been given the opportunity to work for partner company but is based over 40 miles away ? Please any info will be greatly appreciated

Our Response:
Unfortunately, we cannot possibly advise on such a personal decision. Making her qualification the priority may be her best option to keep in mind.It's great your girlfriend has lots of opportunities. It's a matter of giving the pros and cons of each and coming to the final decision herself.
RedundancyExpert - 25-Jan-18 @ 11:50 AM
My girlfriend has been offered a new job at the very respectable BNP Paribas. When she came to hand her notice in the CEO of her current employee stated that she was going to be made redundant with just over £5000 package. To add to the matter it further complicates things because she will be finishing his summer with her level 3 in accountancy , in which she is line for a merit at least or distinction. The dilemma is should she turn down a job with lots of room for progression , take the package look at temping / she has also been given the opportunity to work for partner company but is based over 40 miles away ? Please any info will be greatly appreciated
Kipsy - 24-Jan-18 @ 6:25 PM
Wardis - Your Question:
I am currently within a 30 day consultation period with my company. I do not wish to apply for the position offered therefore I understand this would put me at risk of redundancy. 1st Day of consultation: 16th October (30 days from this date).I have secured myself another job (27/10/2017) but I have yet to inform my current employer, would like be lenient and let me go after the 30 days consultation is up and still receive my redundancy pay?I personally see no point hanging around. Especially this close before Christmas.My question is, this is how I am thinking it will go, but what are your thoughts? I shall speak to HR on Monday 30th October to inform them I shall not be applying for the position.RegardsSean

Our Response:
You may lose your right to statutory redundancy pay if you unreasonably turn down suitable alternative employment, please see link here .
RedundancyExpert - 31-Oct-17 @ 2:52 PM
I am currently within a 30 day consultation period with my company. I do not wish to apply for the position offered therefore I understand this would put me at risk of redundancy. 1st Day of consultation: 16th October (30 days from this date). I have secured myself another job (27/10/2017) but I have yet to inform my current employer, would like be lenient and let me go after the 30 days consultation is up and still receive my redundancy pay? I personally see no point hanging around. Especially this close before Christmas. My question is, this is how I am thinking it will go, but what are your thoughts? I shall speak to HR on Monday 30th October to inform them I shall not be applying for the position. Regards Sean
Wardis - 27-Oct-17 @ 2:46 PM
sun - Your Question:
Last Friday I received a letter from my employer informing me that due to reorganization, my position has been selected as one of those at risk of redundancy. As part of the individual consultation process, I am asked to to meet with HR to discuss my concerns and explore ways to avoid redundancy and discuss suitable alternative employment within the new structure. I am asked to go with suggestions.Do you have any advice on how to prepare for this meeting/ what should I do/ not do and what are my rights with regards to this process? I would very much appreciate it! Thanks Additional info: Full time, over 2y permanent contract, home based- UK employer.Most likely all alternative options (vacancies) would be of lower paid redeployment.

Our Response:
You can see more via the gov.uk link here and here . I'm afraid we cannot give individual advice, but we wish you the best of luck and hope the situation turns out to your advantage.
RedundancyExpert - 5-Sep-17 @ 10:27 AM
Last Friday I received a letter from my employer informing me that due to reorganization, my position has been selected as one of those at risk of redundancy. As part of the individual consultation process, I am asked to to meet with HR to discuss my concerns and explore ways to avoid redundancy and discuss suitable alternative employment within the new structure. I am asked to go with suggestions. Do you have any advice on how to prepare for this meeting/ what should I do/ not do and what are my rights with regards to this process? I would very much appreciate it! Thanks Additional info: Full time, over 2y permanent contract, home based- UK employer. Most likely all alternative options (vacancies) would be of lower paid redeployment.
sun - 4-Sep-17 @ 8:59 AM
Hi, I have handed in my notice and I have 2 weeks left to work of my notice period, however, everyone is likely to be made redundant before my notice period ends. Am I still entitled to my redundancy money?
AF - 29-Mar-17 @ 8:55 PM
Hi. I wax made redundant after 26 years and left my job on 8th Dec 16. My ex employer advised all of us (13 in total) that we could collect our redundancy payment by check on 30th Dec even though wages were always paid by BACs on 28th. Today is the 30th and we have been advised that there is no one available to sign the cheques and that we have to return on Tuesday 3rd Jan to collect. How long can he legally withhold this money. He also has not given any P45's.
Frustratedexemployee - 30-Dec-16 @ 11:27 AM
Whitey - Your Question:
Hi,I have been at my firm for 5 years and have opted to take voluntary redundancy the end of November 16. I was told of the consultation period in May of which I found I was at risk and decided and agreed I would leave the end of 30 November-16. However, I have since secured employment of a new job with a start date oft he 3rd October. I had my notice period approved by HR and a letter of accepting from my current firm accepting my leave date. No mention of any redundancy payment in full or even part payment.However during the time this began and my leave date up until todays date, the whole idea of me leaving in Nov-16 was to make sure a smooth hand over of information to an outsourced company was delivered. I believe I have done that, as I am still employed in the company, and due to other members of my department leaving would not have been allowed to leave before my agreed end date of 30th November 16. Therefore my question is, am I entitled to some sort of redundancy payment? I have fulfilled the requirements of the redundancy situation up until my leave date and the transfer of work to the newly outsourced company has already begun. But not the agreed date on my offer (which was subject to change anyway). Therefore feel and deem it un-fair that I should lose all of a large part of what was agreed previously.Any thoughts on this situation?ThanksDavid

Our Response:
You can see more via the information outlined in the Simplify the Law link here. I also advise you give ACAS a call to see whether your employer is conducting the redundancy process fairly. A redundancy payment should have been mentioned if your employer was considering making a payment, so you will need to sort this issue out.
RedundancyExpert - 14-Sep-16 @ 11:49 AM
Hi, I have been at my firm for 5 years and have opted to take voluntary redundancy the end of November 16. I was told of the consultation period in May of which I found I was at risk and decided and agreed I would leave the end of 30 November-16. However, I have since secured employment of a new job with a start date oft he 3rd October. I had my notice period approved by HR and a letter of accepting from my current firm accepting my leave date. No mention of any redundancy payment in full or even part payment. However during the time this began and my leave date up until todays date, the whole idea of me leaving in Nov-16 was to make sure a smooth hand over of information to an outsourced company was delivered. I believe I have done that, as I am still employed in the company, and due to other members of my department leaving would not have been allowed to leave before my agreed end date of 30th November 16. Therefore my question is, am I entitled to some sort of redundancy payment? I have fulfilled the requirements of the redundancy situation up until my leave date and the transfer of work to the newly outsourced company has already begun... But not the agreed date on my offer (which was subject to change anyway). Therefore feel and deem it un-fair that I should lose all of a large part of what was agreed previously. Any thoughts on this situation? Thanks David
Whitey - 13-Sep-16 @ 2:53 PM
My notice period (2 weeks) ends 2 days after I start work. will I lose my notice pay? I actually left the company more 3 weeks ago.
Jamie Thomson - 3-Sep-16 @ 11:56 AM
I have been with my current employer for the last 13 years and have been informed my job will no longer exist due to restructure, therefore I will receive my redundancy notice in 2 months which will then follow with a 3 month redundancy notice. My question is, will I still receive the redundancy pay I am due if I am offered a job prior to recieving the official redundancy notice. I would only hand in my notice (if offered another job) after recieving the redundancy notice, however, I wanted to check if there were any risks of me losing my redundancy pay from accepting/being officially offered a job before this notice had been given to me.
Jintyb - 19-Apr-16 @ 7:19 PM
Reddevil - Your Question:
The problem I got is that my works company has offered me voluntary redundancy as its being taken over from another company I'm thinking of taking it then when the new company takes over I will apply for the position was in on the last company I feel like I've worked very hard over the last 6 years n I'm due a bit of a pay out but I like my job and if I don't take the redundancy then my contract gets transferd over same pay same hours than then I start working for the new company Is it wrong or right ?

Our Response:
While you are entitled to apply for the redundancy and may wish to apply for the same job you were doing, there is no guarantee you may get your old job back. This is where the risk comes in and much depends on whether you can get a job easily, if you don't get your old job back. It may be worth you doing some research on how long your redundancy money may last once you come out of work and how easy you feel it may be to get a job in the same or similar field.
RedundancyExpert - 29-Feb-16 @ 2:56 PM
The problem I got is that my works company has offered me voluntary redundancy as its being taken over from another company I'm thinking of taking it then when the new company takes over i will apply for the position was in on the last company I feel like I've worked very hard over the last 6 years n I'm due a bit of a pay out but I like my job and if I don't take the redundancy then my contract gets transferd over same pay same hours than then I start working for the new company Is it wrong or right ?
Reddevil - 29-Feb-16 @ 4:31 AM
Hi, im in a bit of strange situation and just wondering what your thoughts and advice might be. I'm basically in a consultation period, during which I managed to secure a new job role. I haven't handed in my notice yet as I wont start until a week or two after I have been given my compulsory notice period. I initially thought this would only be a week, as I have only been with my current employer for one year. HR advised its actually 4 weeks (as part of my contract) and I would be paid this, regardless of going on to a new job role within this notice period. However, my manager was trying to ask me to hand my notice in so that it would end this consultation process and that they would allow me to leave early- but I think they are trying to back track on what HR have said. Has anyone else been in this situation? Personally I don't think I should hand my notice in, until the company has issued me with my formal notice (which is definitely going to happen) as I'm entitled to the 4 weeks which HR said I would be paid- regardless of starting a new job. Any help would be greatly appreciated!
Frosty873 - 24-Feb-16 @ 3:43 PM
I'm being made redundant and I will get around £8,000. I'm 26 and would like to retrain as a veternary nurse, is there a cheap route in? I don't mind paying some money towards a course, but I'll have to pay living expenses too which means my money wont last very long.
CJ - 26-Nov-14 @ 2:15 PM
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