If your employer is looking to cut costs and reduce spending, they may offer you a voluntary redundancy package to terminate your employment in exchange for a more generous pay-out. What does this mean for you as an employee? And should you accept this offer?
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What is voluntary redundancy?
Voluntary redundancy is when an employer offers to make an employee redundant (with their consent) and terminate their employment in exchange for a generous pay-out.
This pay-out is usually more than a statutory redundancy payment as the employer will need to provide additional incentive for the employee to take voluntary redundancy. The package will usually consider the employee’s length of service, notice period and contractual benefits. For example, it may be 2x your weekly salary for every year of service.
However, every employer will offer a different package and as it is voluntary, there may be scope for the employee to negotiate this package. On the other hand, the employer may withdraw their offer of voluntary redundancy on this basis so it is important to be realistic with requests and tread carefully.
Employees can also volunteer and ask for voluntary redundancy if they are aware that their employer will be making compulsory redundancies soon. We have prepared a draft letter for employees to consider when requesting voluntary redundancy below.
Should I take voluntary redundancy?
This is a difficult question and it will depend on your personal situation. We would suggest that you contact our team for bespoke and tailored legal advice on your position and options in your situation.
However, in any situation you should consider whether the voluntary redundancy package offered contains appropriate additional incentive. For example, you may be offered an amount in excess of the statutory redundancy package, or you may be paid in lieu of notice.
Other things worth considering include:
- Do you have a mortgage protection policy? Voluntary redundancy is usually excluded from policies, so your mortgage payments are unlikely to be covered. An alternative may be compulsory redundancy.
- Are you considering claiming benefits? If you opt for voluntary redundancy you may be entitled to claim specific benefits.
- Are you planning for retirement? Opting for early retirement may be a more beneficial exit package if this scheme is available.
The voluntary redundancy process
Whether you have been selected for voluntary redundancy or compulsory redundancy, your employer must still go through the same process and follow voluntary redundancy rules as you have the same legal rights. This will include a consultation process to discuss details of the redundancy, to answer your questions and to inform you of your rights. If the employer fails to follow a fair redundancy procedure, you may be entitled to a claim for unfair dismissal.
Another key thing to remember is that voluntary redundancy is optional. Your employer may propose voluntary redundancy, or you may volunteer for the scheme, but it is the employer that will make the final decision on who is selected for redundancy.
What to include in a voluntary redundancy letter [Letter template]
If you wish to be considered for voluntary redundancy, it is helpful to send your employer a letter setting this out in writing. We have prepared a voluntary redundancy letter template below:
I understand from [our discussion/your letter dated xx.xx.xxxx] that the business is considering making compulsory and voluntary redundancies.
I am writing to formally apply for voluntary redundancy. Can you please provide me with details of the voluntary redundancy package so that I can make a fully informed decision and confirm my application thereafter.
I look forward to hearing from you in the near future.
Voluntary Redundancy FAQs
Can I be turned down for voluntary redundancy?
Voluntary redundancy is optional for both the employee and employer. If the employer does not feel that you would be a suitable applicant for voluntary redundancy, they would be within their rights to reject your application. Of course, your application cannot be rejected for a discriminatory reason.
Can I take voluntary redundancy if I have a job offer?
You may need to wait a period of time after accepting voluntary redundancy before starting a new job. This may be because you will need to complete your notice period, or your contract may have restrictive covenants. It will depend on the redundancy agreement between yourself and the employer and we would suggest that you contact us for specific legal advice before potentially breaching the agreement.
Should I take a voluntary severance package?
This is a difficult question and it will depend on your person situation. We would suggest that you contact our team for bespoke and tailored legal advice on your position and options in your situation.
To find out more about the employment law services we offer, reach out to KLG Law today. Our solicitors specialising in employment law can assist in legal matters for both employers and employees. Please contact our team of employment law specialists on 0330 221 0684 or contact our legal team online.
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