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Benefits following redundancy and/or finishing work

Which benefit?

You may need to claim one or a combination of the following benefits:

  • Jobseekers Allowance - if you are looking for work
  • Employment and Support Allowance - if you are not fit for work
  • Income Support - if you do not have to sign on e.g. you are a carer.
  • Housing Benefit - for help with rent
  • Council Tax Benefit - for help with Council Tax
  • Pension Credit - if you are aged 60 or over and do not wish to claim
  • Jobseekers Allowance
  • Other benefits such as Carers Allowance.

Jobseekers Allowance - Claim by telephoning 0800 055 6688

You must be available for and ‘actively seeking work.’

There are 2 types of Jobseeker’s Allowance.

  1. Contribution based/ JSA (c): Paid for up to 26 weeks if you have paid sufficient National Insurance credits. Final payments from your employer will not affect this type of benefit however only the first £50 per week of any personal or occupational pension will be ignored.
  2. Income based/ JSA (IB): Means tested; claim includes an amount for your partner and mortgage costs (if applicable)

You may be unable to claim Jobseeker’s Allowance for a fixed period of time if you chose to give up your job or were dismissed due to poor conduct. The period disallowed is called a 'sanction period.' N.B. Sanction periods do not apply to people leaving employment because of voluntary redundancy or severance.

Income support- claim by telephoning 0800 055 6688

Income Support (IS) is a means tested benefit for people under pension age on low or no income who do not have to be available for work. E.g. carers or lone parents with children under aged 7yrs (5yrs from October 2011) As with Jobseeker’s Allowance there is provision to claim an amount for your partner and mortgage interest if applicable.

Pension credit: claim by telephoning 0800 991 234; Textphone: 0800 169 0133

Means tested benefit for people that have reached the qualifying age. The qualifying age will be between 60 to 66 years between 6/4/10 until 6/4/20 as it is increasing alongside the women’s state pension age.

Redundancy/severance payments

When your job ends you may be entitled to statutory redundancy pay or an agreed severance package from your employer.

It is important to be aware that payments from your employer may affect benefit entitlement.

Any lump sum payment received due to redundancy or voluntary severance is treated as savings for benefit purposes.

Means tested benefits such as Income Support, Employment and Support Allowance (income related), Jobseekers Allowance (income based), Pension Credit, Housing Benefit and Council Tax Benefit are affected by savings or ‘capital’ in the following way:

  • Up to Pension credit age; no benefit will be paid if you or your partner’s capital is £16,000 or more and there is an assumed income of £1 for every £250 called ‘Tariff income’ for any savings between £6,000 and £16,000.
  • Over Pension credit age; Tariff income begins from £10,000. Pension service will count you as having an income of £1 for every £500 worth of savings over £10,000.

N.B It is important to keep receipts for any items purchased from your lump sum as the Department for Work and Pensions may wish to see them. DO NOT give money to friends or family as a gift if you intend to claim a means tested benefit as the DWP may decide that you still have the money and assume Tariff income from it.

Entitlement to Working Tax Credit may be affected - you should notify them as soon as possible by telephoning them on 0345 300 3900 (textphone 0345 300 3909).

Entitlement will continue if your partner works full-time hours

OR

Working Tax Credit can then continue to be paid for 4 weeks after stopping work.
It will count as income for any means tested benefits claimed. NB Working Tax Credit is only payable to people in work. (Child Tax Credit may be payable if you have dependent children)

Holiday pay or Pay in Lieu of Notice: may affect entitlement to benefit. The rules vary depending on when paid and what period they cover. Check with DWP when making your claim to benefit.

Any private pension or occupational (works) pension received after stopping work will be taken as income when calculating all benefits except Carers Allowance or State Retirement Pension.

  • Employment Support Allowance based on contributions: The first £85 per week of any work or private pension paid is ignored. Any income above £85 is reduced by 50 pence for every pound. Eg If your works pension is £95 per week the first £85 will be ignored leaving £10 in excess of £85. This amount is then halved giving an income of £5. £5 per week will then be deducted from your weekly benefit.
  • Jobseekers Allowance based on contributions: The first £50 per week of your occupational/ private pension will not affect benefit. Any monies over this will be wholly taken into account.
  • Means tested benefits will take your full pension as income.

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Last updated: 29 August 2016

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