Voluntary Redundancy... What you need to know!

Voluntary Redundancy


What is Voluntary Redundancy?

Voluntary redundancy is when an employer asks a member of staff to agree to terminate their contract, in return for a financial incentive.
It is usually offered to more senior or long-term employees, although it is possible for other employees to apply if they want to be considered.


Is voluntary redundancy compulsory?

No. As the name recommends, it is taken voluntarily by the employee. This implies there's no obligation for you to acknowledge the terms offered by your manager. Nonetheless, they are generally more rewarding than those that accompany a redundancy payment.


Do I have to apply for voluntary redundancy?

If your employer asks you to consider voluntary redundancy, you’re under no obligation to do so; as the name suggests it’s entirely voluntary. Similarly, if you volunteer, your employer is under no obligation to offer it to you - this might be because they have more volunteers than they need, or simply because they want to keep you

Refusing to apply for voluntary redundancy will not affect your entitlement to any statutory or contractual payments you may be due if you are ultimately made redundant in the future

You should think very carefully before accepting voluntary redundancy terms. For example, while the amount may seem to be a lot, you should seriously consider whether it will last until you find another job. If you have financial commitments, it’s important to consider how you will continue to meet those obligations. Carefully check the terms of any mortgage or loan protection insurance and whether accepting voluntary redundancy will affect your right to claim under the policy (ies) and/or to claim any state benefits.


How much money can I expect to receive?

The amount of money you should receive as part of a compulsory redundancy depends on a number of factors: your age, your length of service, and your weekly pay. 

Beside any contractual enhanced redundancy strategy, there are no rigid standards regarding how much your employer can offer you if take voluntary redundancy. All things considered, you ought to for the most part anticipate that it should be more than you would get for compulsory redundancy. Your manager should tell what they are offering – it's probably going to consider factors, for example, how long you've been with the organization and your present salary.  It may be they also offer to pay you in lieu of your notice (so you can leave earlier) and an agreed reference.

It’s a good idea to ask for this information to be given to you in writing before you decide whether or not to accept any offer your employer makes. You may be given the opportunity to discuss the payment in order to try to negotiate a more generous arrangement. Or your employer may simply offer it to you on a ‘take it or leave it’ basis.

When the offer is made, it's up to you to choose whether or not to acknowledge the voluntary terms. In the event that you believe there's room for negotiation, you might need to think about engaging an outsider, for example, a solicitor or trade union representative, to haggle for you.


The voluntary redundancy process

Many stages of a voluntary redundancy process mirror those of a compulsory redundancy process – you must ensure there are no alternatives and take care not to discriminate.

With voluntary redundancy, however, you can be selective over which applications you’ll accept, so as to protect yourself in situations where losing particular skills and experience would place the business at even further detriment. It’s advisable to state from the outset – for example, in your redundancy policy – that you reserve the right not to accept all applications

Here are the steps to follow in a voluntary redundancy process:

  • Ensure there are so alternative to redundancy- Likewise with a mandatory redundancy situation, you should ensure that redundancy is fundamental and that no different arrangements, like decreasing advantages or working hours, exist.
  • Offer voluntary redundancy to staff- Typically, voluntary redundancy should be offered to all staff who have roles at risk of redundancy. In some cases, you may wish to offer it to the entire company if you’re confident losing staff from other departments will resolve the initial challenges the business is facing
  • Consider whether you will offer an enhanced voluntary redundancy package- It’s normal for organizations to offer improved payments and bundles, far beyond the legal repetition privilege, to boost staff for redundancy. In the event that you decided to do this, make your suggestion clear from the beginning.
  • Take care not to discriminate- It’s always advisable to offer voluntary redundancy to all of the affected roles regardless of age or length of service, (or any other characteristic protected by equality law, such as gender or disability). Failing to do so may appear discriminatory.
  • Remember to class the selected volunteer(s) as redundant- A voluntary redundancy must still be treated as a redundancy, rather than a choice to quit. This means you must make sure the employee receives redundancy pay (if eligible), and their notice period.

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