Nobody enjoys bringing people bad news.
Redundancy is bad news.
But voluntary redundancy is a chance to offer your staff a fair package, and to try to end on good terms.
When your staff agree to voluntary redundancy, it means you spend less time making compulsory redundancies.
Read our guide and get yourself up to speed on this more agreeable alternative.
Compulsory redundancy VS voluntary redundancy
Voluntary redundancy is more likely to send your ex-staff away with a good feeling than compulsory redundancy would.
If you wrote in your contractual terms that you'll seek volunteers in a redundancy situation before any compulsory redundancies, you must stick to this obligation.
Make sure you know your redundancy procedure.
Voluntary redundancy rights
If one of your staff decides to volunteer for redundancy, they can get statutory redundancy pay as long as they have at least two years' continuous service with you.
Is there a typical voluntary redundancy package you should offer your staff?
When you build a voluntary redundancy package, remember that your aim is for your staff to agree to what you're going to offer them.
If they agree in a cordial way, bonus points. There's more chance of an ex-employee having good things to say about your company if they've left on good terms.
Packages vary from business to business. You could offer a week's pay for each year of service. Or, you might offer something more lucrative—for instance, six months' pay. Or, even a full year's pay.
When working out what sort of package to offer, you should think about:
- The length of your employee's notice period.
- The time it could take them to find a new job.
- Any benefits their contract entitles them to.
Decide the maximum that you'll offer an employee, and keep this amount in reserve.
Well, if you're willing to offer up to 12 months' voluntary redundancy pay, perhaps begin by offering six months'. Some staff will try to negotiate a better package, and since voluntary redundancy is voluntary, if you refuse to up your offer, they have the right to turn it down.
In this case, if they turn it down, you can offer more of the amount you're already happy to offer.
Redundancy is a delicate matter. For some employees, when you choose them for redundancy, you'll hurt their pride and their feelings.
The reasons why you need to cut your budget and your personnel won't be important to them. You might have to deal with one or two troublesome employees who refuse your voluntary redundancy offers simply to spite you.
Keep written records of the whole redundancy process for each employee
Written proof that you have followed a fair procedure will work in your favour if your employee tries to make a claim against you.
Write your employee a voluntary redundancy letter that explains what happens when they take voluntary redundancy. Make clear that you're offering a voluntary redundancy and clarify the amount you're offering.
In the letter, also include:
- Information regarding the employee's notice period. Will they need to work it? Or, will you pay them in lieu of notice?
- Will they need to use their remaining holidays, if they have any? Or, will you pay them in lieu of these?
- Are they eligible for any bonus or commission pay?
You could also take this moment to apologise for the unfortunate nature of the situation.
Sometimes you'll have to fall back on compulsory redundancy
Voluntary redundancy rejections will mean you'll have to make compulsory redundancies. Make sure that you use fair criteria when choosing whom you let go.
Fair criteria include:
- Disciplinary record.
- Absence record.
- Lateness record.
- Skill level.
When reviewing an employee's absence and lateness, you should make sure that you check whether any instances of absence or lateness were due to a disability or any other protected characteristic.
Read our guide to learn more about compulsory redundancy.