Universal Credit: Redundancy impact explained as redundancies reach ‘record’ high of 314k
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Universal Credit payments can be impacted if a claimant suddenly receives a large windfall of cash. This can come from many sources but in the current environment, many people may have to contend with redundancy payments.
The ONS recently released employment figures for the last quarter, which showed unemployment has risen by 0.7 percent.
While this was only a modest rise, it was also revealed that redundancies rose by a record high of 314,000.
Jonathan Boys, a Labour Market Economist at CIPD, examined some of the positive aspects of the figures but warned redundancy issues are likely to be problematic for a while: “A modest recovery in hours worked reflects the summer reopening when large numbers of people gradually moved off furlough.
“Some sectors were able to make hay while the sun shone, but we now know coronavirus cases were rising.
“Furlough helped to limit jobs losses and protected incomes, and it is therefore right that the Government has extended it until the end of March – especially in light of promising news on a vaccine.
“This will boost business confidence and help stabilise employment through to the spring. Businesses now have a scheme that they understand and a reasonable timeframe in which to conduct workforce planning.
“However, unemployment rose sharply this quarter and redundancies increased by a record number.
“The CIPD’s latest forward-looking Labour Market Outlook report suggests that redundancy activity will remain high in the three months to December and could therefore surpass the total number experienced after the financial crash.
“The economic pain of the pandemic has been cushioned by furlough and other government support schemes but will start to increase over the winter.
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“We believe the Government needs to do more to help people upskill and reskill beyond what’s been outlined in the Kickstart scheme and Lifetime Skills Guarantee.
“This includes reforming the Apprenticeship Levy and increasing access to lifelong learning.”
With more people being made redundant, it is important to know how redundancy payments can impact Universal Credit.
Universal Credit claimants will have redundancy payments treated as capital, which can also include elements such as savings and investments.
If a claimant and their partner have capital over £16,000, they will not be able to claim Universal Credit.
If they have capital between £6,000 and £16,000, it will be treated as generating income and will gradually reduce the Universal Credit payments.
Universal Credit payments are generally always affected by earnings from employment.
For every £1 earned from employment, Universal Credit will reduce by 63p.
To be eligible for Universal Credit at all a person needs to be:
- On a low income or out of work
- Aged between 18 and state pension age
- Have less than £16,000 in savings
- Living in the UK
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