Losing your job can be a stressful experience, but if you're reading this, you may have recently been given a large redundancy payment and are wondering what to do next. A redundancy payment can be a real boost to your bank balance or even the start of a house deposit. But when you’ve just gone through the uncertainty of redundancy it can be daunting to think about what to do first.

From tech workers to financial services staff, many people in Ireland have found themselves in your position. Even with the silver lining of a redundancy payment, there’s a lot to think about. So, it’s important not to make any major financial decisions in the first few months if possible.  

Now might be an opportunity to review your career and many companies provide coaching or training as part of their redundancy programmes. Examining your finances would also be a good idea at this time.  

Can you afford to take time off work, or do you need a job straight away? If you’re lucky enough to be able to take time out, talking to a financial advisor would help you understand your situation and plan for the future.

Here are some of the key considerations to keep in mind when faced with redundancy in Ireland, including your legal rights, financial planning, and practical steps to take next.

What is statutory redundancy?

You’re entitled to statutory redundancy if you have worked for your employer for over two years. Your minimum redundancy payment is calculated as two weeks' pay for each year you worked there, plus an additional week's pay. It's capped out at a max of €600 a week (or €31,200 a year).

You can figure out how much statutory redundancy pay you might get with the Government's redundancy calculator.

Many companies offer their own redundancy payment in addition to the statutory one. These can be very generous, especially in the case of voluntary redundancies, so can make a big difference to your bank balance. As an added bonus to be aware of, these kinds of lump-sum payments may qualify for tax relief or exemption.

Managing your finances if you've been made redundant 

Here are a few things to consider when it comes to your finances in the time shortly after being made redundant:  

Don't rush into any decisions 

If you're offered a lump sum payout when you leave your job, you might be asking yourself: should I use it to pay off some of the mortgage, or get a new car, or even invest it? Do I use it to cover expenses while I’m looking for a new job? Or take the chance to travel?  

It can be tempting to spend it right away. However, it's important to resist the urge to make any rash purchases. Get advice from a financial advisor and take some time to consider their advice before making any big decisions about what to do with your money. 

Get your benefits back in place 

When you lose your job, you also lose any benefits that came with it. This could include death in service, income protection, health insurance, and a company pension. It's important to get these covers back in place as soon as possible. If you're going into a new company, check the contract to make sure your benefits match what you had previously, or work on getting them set up privately with a financial advisor once your income starts flowing in again. 

Protect what you have 

Financial planning is all about protecting what you have. This means having an emergency fund to cover unexpected expenses, income protection to replace lost income, and insurance to protect your assets and your loved ones. 

If you've been made redundant, it's important to review your current financial situation and make sure you have these essential protections in place. If you already have a financial advisor, it’s a good time to check in with them. If not, you can book a free appointment with an advisor below to go through your options with zero obligations.  

Think long-term 

If you have a company pension plan, you’ll have a few options for what to do with it after you've been made redundant. You can do nothing, and the funds will continue to be invested until you reach retirement age and can draw down your pension, transfer it to a new pension scheme, or get your contributions back, among many options. 

It can be tempting to just do whatever your work friends do, but it’s important to remember that their financial situation can be very different to yours. It’s better to get trusted financial advice from an expert, so you can fully understand your finances and make the right choice for you.  

Reset your finances 

Being made redundant can be an opportunity to reset your finances. Take this time to review your budget and see where you can make adjustments. Look for ways to cut back on expenses and increase your income. You may also want to consider working with a financial advisor to help you develop a new financial plan that takes your current situation into account.  

What are the next steps for my finances after redundancy?

Redundancy can happen for a bunch of reasons, like economic change or your company restructuring.  For some, it can be a difficult time, but it can also be full of possibilities.

By avoiding making any rash decisions, getting the protection benefits provided by your previous employer back in place, and chatting with a financial advisor about the most important steps to take next, you can keep things on track and get back on your feet as quickly as possible.

Remember, it's important to take care of yourself during this difficult time, so don't be afraid to reach out to family, friends, or professionals for support. And if you’d like to speak to an Irish Life Financial Services advisor about the next steps for your financial wellbeing, make an appointment below to get free, expert advice.