Debt Advisory Line's Recession Tips
Wed 20th May 09 - 9:23

In this time of recession hundreds of companies are implementing cost saving measures in order to stay afloat. Analysts now predict that the total level of redundancies will reach 300,000 in the second quarter of 2009, with the economy set to shed at least 600,000 jobs overall during the course of the year.

The most frequent method of cost cutting is offering redundancy to staff; however there are other ways employers can cut costs, all of which can seriously affect the cash in your pocket. These include:

• implementing a three or four day working week
• pay cuts
• inappropriate job alternatives in sectors of the company with a higher rerun on investment

Your employer must be aware of, and comply with, employment law when putting any of these into practice. The above options, including redundancy, are not particularly easy to implement as there are always a maze of employment law specifications to which you and your company must comply.

Redundancy

If you've been made redundant you will probably be entitled to help from the authorities in the form of benefits and you should approach your local Job Centre as soon as possible to find out what your options are.

If you have other outstanding debts you may need to speak to your creditors to let them know about the change in your circumstances.

Calculating redundancy pay

The redundancy pay you are entitled to under the statutory redundancy payment scheme depends on your age and length of service (from two years up to twenty years). This determines the number of weeks pay due, which is then subject to a limit on weekly pay.

To calculate the number of weeks pay due, you should use the following amounts -

• 0.5 week's pay for each full year of service where your age is less than 22
• 1 week's pay for each full year of service where your age is 22 or above, but less than 41
• 1.5 weeks' pay for each full year of service when you're aged is over 41

(www.berr.gov.uk)

Employers reducing employee hours

Whilst a three day weekend is often a cause for celebration, in these troubled times you'll probably not welcome a cut in the working week or in your working hours if it means lower pay.

As an employee, if your employer makes you work reduced hours for four consecutive weeks or for six out of 13 weeks, you're entitled to take a redundancy package.

Being offered a pay cut

It is never good news when your boss declares the need to reduce your pay. However, sometimes it's necessary in order to keep a business running without resorting to redundancies.

One important point to remember is that your employer cannot just cut wages; your employer must agree it with you. Don't let your employer get away with trying to force a pay cut on you.

Cutting your costs

It's arguable whether it's better for the economy for you to cut spending, but if you're feeling the pinch it's important you do everything you can to keep yourself and your family on an even keel.

Shop around! There are an increasing amount of bargains to be had - companies still want your business so make sure you're getting the best deal out there.

Only spend when you absolutely need to, if you've been hit by the affects of the recession make sure you keep your spending down to sensible levels, focusing on things such as mortgage repayments, utilities and food.

What to do about debt

If you find yourself with less money in your pocket than you're used to you should make sure you keep up repayments on the essentials, you need to pay your rent/mortgage and pay for your utility costs.

Reduce your normal spending to the minimums and if you do incur any debts in the process make sure you face up to them and tackle them head on.

If you feel your financial situation is out of control or you want the reassurance of professional help, speak to a debt advisor. Debt Advisory Line's debt experts offer a confidential assessment to identify the best solutions for your own financial situation.

 

Back to Latest News

View the Archive