When an employer considers the possibility of making compulsory redundancies in their workforce, they should always investigate any available alternatives to that course of action first.
One of these alternatives is voluntary redundancy which may reduce the number of compulsory redundancies that an employer needs to make. It may even be that sufficient voluntary redundancies can be made to prevent the need for any compulsory redundancies.
What is voluntary redundancy?
Voluntary redundancy is where the employee chooses to take redundancy, rather than redundancy being enforced on them.
An employee may be offered voluntary redundancy where compulsory redundancy is being considered by the employer, or the employee may ask for voluntary redundancy.
Where an employee makes it known that they would accept voluntary redundancy, this does not mean that they will definitely be made redundant on that basis.
Offers of voluntary redundancy are often made with an attractive incentive.
If an employee accepts an offer of voluntary redundancy
Generally, requests for voluntary redundancy will be made by the employer during individual consultation meetings. However, it is not unusual for an employer to make a general communication to their whole workforce that they are seeking workers to accept voluntary redundancy.
Should an employee accept an offer, they must be informed that their acceptance does not mean that they will definitely be subject to voluntary redundancy. They may still be made redundant on a compulsory basis or allowed to remain in their job.
It should already have been made clear to the employee what redundancy would mean for them, for instance, the redundancy pay and notice they are eligible for. They should also have been informed of any benefits to accepting an offer of voluntary redundancy, such as a higher amount of redundancy pay. The employer may wish to confirm the voluntary redundancy conditions again with the employee.
The employer should confirm the content of the meeting with the employer in writing, including their acceptance of voluntary redundancy.
The scoring of the employee and their consultation period should continue, regardless of their acceptance of the offer, and the possibility of making them redundant, whether on a compulsory or voluntary basis, should be handled without discrimination.
Any employee who agreed to an offer of voluntary redundancy but who subsequently was made redundant on a compulsory basis or allowed to keep their job should receive an explanation in writing of why this decision was made.
If the required number of redundancies can be made through voluntary redundancies, then the employer may have no need to make any compulsory redundancies.
If an employee asks for voluntary redundancy
The first step is to decide whether the employee’s role is redundant. Is that job necessary for the business’ operation? If it is still necessary, then the employee can’t be made redundant. An easy way to work this out is to ask the following question, ‘If the employee leaves, will it be necessary to recruit a new member of staff to replace them?’. If the answer is yes, then redundancy is not appropriate.
The next step is to find out their situation in regard to redundancy at work:
- Is their job redundant but they have been offered alternative employment?
- Have they responded to a request for voluntary redundancy made to the entire workforce even though they are not in the pool of employees who are being considered for redundancy?
- Are they in the pool of possible employees being considered for redundancy?
The offer of alternative employment will generally mean that redundancy is not available. Are they aware of this? If so, is there a reason that the alternative employment is not suitable? For instance, does the alternative position require that they work hours that are difficult due to childcare?
If the alternative employment is suitable, then it is down to the discretion of the employer whether they will consider the employee for redundancy. However, the employer is under no obligation to do this.
If either of the other two options applies to the employee and the employer is seeking voluntary redundancy candidates, they should follow the procedure laid out in the previous section (What to do if an employee accepts an offer of voluntary redundancy).
Voluntary redundancy: key considerations
Even where voluntary redundancy appears to be the most effective and considerate course of action, it can still have its disadvantages:
- More expensive – many employers add the incentive of a higher redundancy pay-out to an offer of voluntary redundancy. Making redundancies on a voluntary basis can cost an employer much more than if they had made compulsory redundancies.
- Risk of claims of unfair treatment – this may come from employees who applied for voluntary redundancy but received compulsory redundancy, or those who feel jobs could have been saved by requesting voluntary redundancies.
- Loss of valuable staff and skills – where the redundancies are made purely through voluntary redundancy, it may be that the employees who apply are actually members of staff that the employer would like to retain.
When not to use voluntary redundancy
Voluntary redundancy is not always the answer, especially in either of the following situations:
- Where a whole business, or a whole site, is closing, the related jobs are therefore not needed, and there is no chance of alternative employment within the business.
- Every member of staff whose job has become redundant can be offered alternative employment within the business.
What is the redundancy procedure?
Faced with the possibility of making redundancies at work, an employer should ensure they follow a fair and legal procedure in line with their redundancy policy.
Consider whether redundancy is the only option
Are there any alternatives to making employees redundant? For instance:
- relocating a workforce from a site that is closing down to a separate site within the business
- early retirement
- a move to flexible working
- a reduction in hours worked, either permanently or until the business can afford to pay salary for full-time hours
- employees stop working until the business can afford to pay them again
- find alternative employment within the business for employees who would otherwise be redundant
- cease overtime
- cease the use of temporary or contract workers
All alternatives should be investigated before entering into a redundancy process.
Which jobs and employees are no longer needed?
Considerations could include:
- Can a team of workers be reduced or is the whole team redundant?
- Has the redundancy come about because of a change in the way the employer does business, such as automating a process that was previously carried out manually? Can the related employees be retrained to carry out the new process?
- Is a whole business or site closing down and hence the full workforce are no longer needed?
- Once jobs and employees who may be made redundant have been decided on, are there other employees whose roles rely on those? Should they be considered for redundancy?
Make a redundancy announcement
The purpose of the announcement is to inform any affected employees that they are being considered for redundancy. Where the employer wishes to make voluntary redundancies, this should be part of the announcement.
Draw up a set of criteria to score employees
How will the employer decide which employees to make redundant, regardless of whether that is voluntary or compulsory redundancy?
The scoring system should be fair, in line with the redundancy policy and in consideration of any related legislation such as the Employment Rights Act 1996.
This consists of:
- individual consultation meetings for each affected employee, generally three in total,
- where the employee has an opportunity to discuss the redundancy situation (e.g. reasons for redundancy, what the employee is eligible for, alternatives to redundancy, whether voluntary redundancy is a possibility, their scores). The employee must be made aware of and allowed to exercise their right to be accompanied to meetings by a trade union representative or other employee.
- written communication after each meeting outlining what has been discussed, arrangements for further meetings and outcomes
- confirmation of the final decision in writing, including outcome, what will happen next and their right to appeal
- appeal process
The matters contained in this article are intended to be for general information purposes only. This article does not constitute legal advice, nor is it a complete or authoritative statement of the law, and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should be sought.