They are allowed to dismiss you for serious misconduct or ineptitude. But they must not try to disguise this as a redundancy. It is the job that becomes redundant - not the worker. Make sure you know the real reason.

Your employer isn't allowed to get rid of you on the grounds of sex, pregnancy, race, disability or trade union membership.

If you are unsure whether you have been fairly dismissed, seek advice from your union or the Citizens Advice Bureaux.

If you feel you've been unfairly dismissed - or you don't agree with your redundancy payout - you can take your employer to an Employment Tribunal. You'll find this easier if you can do it through a union.

Compensation

A tribunal can order an employer to give you your job back, but will usually make them pay you compensation.

The maximum is £51,700 plus an allowance for each week's pay lost up to a limit of £240 a week. This cap is raised each year in line with inflation. You can't claim for more than 20 years service.

Employment tribunals are a special kind of court that deals with all types of employment issues. Sometimes lawyers will be involved but often workers will be represented by union officers or even by themselves.

Costs aren't normally recovered, and neither is legal aid available for representation - though you may get legal aid for advice on whether you have a good case.

You generally have to have worked for a company for 12 months to be able to take a case to a tribunal - but there are exceptions to this rule.

In cases of discrimination and for health and safety issues you can complain from your first day. Generally you have three months to take action.

To make a case you need to fill in a form called an ET1. You can get this from your union or your local Jobcentre. For more information call the Employment Tribunal Service Line on 0345 959775.

What to do with your money

The good news is that the first £30,000 of redundancy pay is tax-free. The rest may be taxed, although you might be able to reduce the bill by putting some of it into your pension.

You might also want to consult an Independent Financial Adviser. You can get a list of local advisors from IFA Promotions - call 0800 085 3250.

Christine Ross, head of financial planning at SG Hambros, says you shouldn't rush into making decisions.

She advises putting the redundancy payment into a high interest account to start with while you begin to review your debts and liabilities.

"Generally savings after tax are going to pay you less than you will pay out on interest for your mortgage or credit cards," says Christine.

"If there's any left over look first at Isas and unit trusts. But do keep some in a good high-rate internet or telephone-based deposit account."

The future

Before leaving your employer make sure you have your P45, written details of your redundancy package and a good reference.

There are also private careers advice companies - though these can be expensive.

The Department of Trade & Industry has a redundancy payments office - call 0500 848 489. The TUC Know Your Rights helpline is on 0870 600 4882.