Unemployment is at its highest level since the mid 1990s and high earners have not been immune from the recession, figures showed last week.

The number of people out of work has hit 2.26m, the Office for National Statistics said last week. This is an increase of 232,000 in the three months to the end of April and the highest figure for more than 12 years.

Jobcentre data also revealed that the number of chief executives and directors seeking unemployment benefit nearly trebled in May compared with the same month last year, while the number of architects signing on has risen tenfold. And the outlook does not look good — the jobless total is likely to rise to 3m by next year.

In the third instalment of our 10-part clinic, we look at what action should be taken if you lose your job.

1. Know your rights

If you are made redundant and have worked for your employer for at least two years, you are entitled to a payout.

The statutory minimum for redundancy payments is calculated using your age, the amount of time in continuous employment and your weekly pay, up to a limit of £350. Between the ages of 22 and 41, you receive a week’s pay for each full year of service, and 1.5 weeks if you are over 41.

For example, if you are 45 and have completed 15 years’ service, based on the £350 a week maximum, you will receive £5,950 statutory redundancy pay. Refer to your contract to check your entitlement as some employers offer more generous packages than the statutory limit.

Mark Howlett, director at BDO Stoy Hayward Investment Management, said that some accountancy and financial services firms are offering redundancy packages of between three and six months’ net pay, plus two weeks for each year of service. So someone with a salary of £100,000 who has worked for the same company for 20 years might receive £80,000.

Income tax will be charged on any payment over £30,000, and any unpaid wages, notice-period payments and bonuses are taxed as normal.

Howlett advises those over 50 who might consider early retirement to ask their employer to contribute any taxable elements of the redundancy payment into a pension scheme. The recipient would not need to declare this to HM Revenue & Customs as it is considered an employer pension contribution, so there would be no further tax liabiliy.

Suppose you received a £40,000 payout, £10,000 of which would normally be taxable. Your employer could pay that £10,000 into your pension scheme, in which case you would have avoided tax on the entire payout. You would also receive tax relief on the £10,000 — a higher-rate payer would get £4,000.