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What to do if you’re out of work due to Coronavirus

If you find yourself out of work due to COVID-19, make sure you know exactly what your rights are and what you’re entitled to claim.

10 December 2020Jude Faultless 5 min read
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Image by Markus Spiske on Unsplash

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This article was updated on 9th December 2020.

There’s no denying that the COVID-19 pandemic has hit all of us hard and businesses are struggling to stay afloat. The government has put measures in place to help as many people as possible, but you may still find yourself out of work. If this is the case, make sure you know exactly what your rights are and what you’re entitled to claim.

If you’ve been made redundant, check that your company has followed the correct procedure. If they can’t afford to pay you, your company may put you on furlough under the government’s Coronavirus Job Retention Scheme – this means you don’t work but you still get 80% of your income, up to a maximum of £2,500 per month. The Coronavirus Job Retention Scheme will stay open until 31 March 2021.

If you’re self-employed, find out if you’re eligible for the self-employment package which offers you a non-repayable (but taxable) grant. This grant is calculated as 80% of your taxable profit based on your last three years’ accounts.

The far-reaching impact of the pandemic has forced many companies to go out of business. If your employer has gone bust, check what type of pension you have.

If you have a defined contribution pension, you won’t lose your pension pot if your employer has gone bust. This is because defined contribution pensions are usually run by pension providers, not employers. If you have a defined contribution trust-based pension scheme, meaning it’s run by a trust chosen by your employer, you’ll still get your pension if your employer has gone out of business. However, you might not receive as much money, because the scheme’s running costs will be paid by members’ pension pots instead of your employer. If your pension provider has gone bust, you can get compensation from the Financial Services Compensation Scheme (FSCS), as long as your pension provider was authorised by the Financial Conduct Authority.

If you have a defined benefit pension and your employer’s gone bust and can’t pay your pension, you’re usually protected by the Pension Protection Fund.

If you’re a member of a trade union and you’ve lost your job due to redundancy or your employer going out of business, contact your union to find out what support they can offer you.

You’re entitled to ESA (Employment and Support Allowance) if you’re suffering from Coronavirus or if you’re self-isolating based on government advice. You can apply for ESA from the first day of your isolation.

A single person over 25 could receive a standard monthly allowance of £409.89 with Universal Credit. There’s a new process in place meaning you apply online and then they call you back to discuss your situation. They usually pay out after five weeks, but you can ask for an advance to help with your cash flow.

It’s best to apply sooner rather than later, and be patient, as long online queues have been reported. If you're told to ring but can't get through, don't lose hope- they will call you. The staff are working very hard to call everyone back.

Applying for Universal Credit will allow you to claim for Housing Benefit. This benefit can be used to pay your rent, your mortgage interest and any service charges, which could make a significant difference to your finances. You can use the government’s benefits calculator to see if you’re eligible.

The Coronavirus Act 2020 increased the required notice period landlords must give before starting an eviction. This means landlords can’t start the eviction process unless they have given their tenants 6 months’ notice.

See our full guide for renters who are struggling due to coronavirus.

If you’ve not yet taken a three-month mortgage payment holiday, you have until 31 March 2021 to apply for one. This allows you to defer your payments and whilst you’ll still incur interest, this won’t kick in until your payments resume. If you’ve already had or are on a three-month payment holiday, you can 'top-up' to a total of six months.

Top tip: Use this mortgage holiday calculator to see how a payment holiday could affect your mortgage.

As long as you agree your mortgage holiday in advance, it won’t affect your credit score.

Energy bills

You don’t need to worry about being cut off as all energy providers have suspended disconnections, and most are pushing back their billing dates. If you top up your energy and can’t get to the shops or can’t afford to top up, don’t worry – energy companies have put measures in place to help you. Contacting your supplier should be your first port of call.

Water bills

This varies by supplier with payment holidays, payment schedules and payment caps available. Again, the rule of thumb is to contact your supplier and let them know you need help.

Council tax

A lot of councils are introducing measures to help, but it varies council to council so check what your local authority’s policy is. Some are offering payment holidays, and some are suspending all enforcement, so you won’t be penalised if you fall behind on your payments.

The coronavirus crisis is hitting certain industries especially hard. But there are a few routes you could take if you’re looking for work.

Could you offer your skills online?

The bail-out packages are designed to keep money in our pockets, so people and businesses are still able to pay for services. You could offer your skills online, for example through online tutoring, designing, or writing.

Could you try a different industry?

There are jobs out there. Many businesses are staying open because they are critical to the running of the country. The supermarkets are under enormous pressure to keep up with demand and they are a good place to start. Lidl and Sainsbury’s have announced a large number of fixed term roles.

The same goes for home delivery businesses and warehouses. It might not be the work that you trained for, but it will keep the money coming in. And you’ll be providing an essential service that people really need right now.

Can I work for another employer if I've been furloughed?

You may be able to work for another employer, as long as it doesn’t breach anything in your employment contract. You should only work outside of hours you’d normally work in the job you’ve been furloughed from. For example, taking a weekend job at a supermarket, or delivering in the evening, may not breach your contract if it states your working hours are 9am-5pm.

If you’re out of work, now’s the time to contact your utility provider, landlord or mortgage lender and make a plan. Your providers should be sympathetic and help you with your situation.

Try to be kind to yourself if you are feeling down due to a job loss. Psychologists note that losing a job often equates to the grief of losing a loved one, so take time to process your emotions.

It could be that you just need to talk to someone to get things off your chest or need a friendly ear to listen to you. Lots of charities have helplines where you can speak to a real person about your situation. For example, Mind and Samaritans have helplines that you can call, and they can also help you deal with the mental repercussions of debt and financial worry.

Jude Faultless Image

Written by Jude Faultless

Personal Finance Writer

Jude is an experienced personal finance writer and expert. She has written this article especially for ClearScore.