Voluntary redundancy
Voluntary redundancy is a pathway for employees to leave their role in exchange for a financial package, often during times of restructuring or cost-cutting within a company (within a redundancy process). This guide provides insights into what voluntary redundancy entails, how it works, and your rights throughout the process.
Read our guide on voluntary redundancy below
What is voluntary redundancy?
Voluntary redundancy occurs when an employer offers employees the opportunity to leave their role voluntarily instead of being selected for compulsory redundancy. Typically, this is accompanied by a redundancy package, which may include a financial settlement. Employers should normally considering asking for volunteers for redundancy before a redundancy process begins, but there is no obligation on the employer to consider offering voluntary redundancies.
Employers often use voluntary redundancy as a less contentious way to reduce the workforce, minimizing disruption and avoiding compulsory layoffs. Employees may opt for voluntary redundancy if they feel it aligns with their financial or career goals.
Do I need to ask for voluntary redundancy?
As above, there is no obligation for an employer to offer voluntary redundancies. However, if the employer is considering starting a voluntary redundancy process then there are two ways that a voluntary redundancy offer could be made:
- Voluntary redundancy could be offered by the employer (which is the usual method); or
- Employees can request to be considered for voluntary redundancy
If you are aware that redundancies are imminent, it may be worth speaking to your manager or HR department to discuss the possibility of voluntary redundancy.
However, approaching your employer about voluntary redundancy requires careful consideration. Doing so may indicate that you are open to leaving your role, which could impact your position if the redundancy does not proceed or your request is declined.
Do I have to apply for voluntary redundancy?
You don’t have to apply for voluntary redundancy, it can often be offered by the employer instead.
Employers often invite applications for voluntary redundancy as part of their redundancy process. Applying for voluntary redundancy is optional, and you are under no obligation to accept an offer if you are not satisfied with the terms.
Is voluntary redundancy right for you?
Whether voluntary redundancy is the right choice depends on your personal circumstances, career aspirations, and financial situation. Some factors to consider include:
- The financial package being offered
- The availability of alternative employment opportunities
- Your career goals and prospects outside the company
- Whether you feel secure in your current role if redundancies continue
- How happy you are in your current role
It’s essential to thoroughly evaluate the redundancy package being offered, as well as any non-financial implications, before deciding whether to apply.
You should consider discussing any offer of, or application for, voluntary redundancy with people you trust (such as friends or family) before making a decision – it can be a decision with significant consequences.
How much money can you expect to receive?
The financial package offered with voluntary redundancy varies depending on the employer’s policies, your salary, your age, and your length of service. It may include:
- Statutory redundancy pay (based on your age, weekly pay, and years of service)
- An enhanced redundancy package (additional payments offered by the employer)
- Payment for unused annual leave or notice periods
Check the redundancy offer
Carefully review the terms of the offer, including:
- How your statutory and enhanced redundancy pay is calculated
- How your notice period should be dealt with, and whether any bonus or commission should be paid
- Any non-monetary benefits, such as career support or training
- Tax implications of the payment
Read our guide on: taxation of ex-gratia payments
Can I negotiate a voluntary redundancy offer?
Yes, you can try and negotiate the terms of a voluntary redundancy offer.
Employers may be open to discussions, especially if they are keen to avoid compulsory redundancies; some employers, however, will have a particular formula and calculation that they use for voluntary redundancy payments, and will refuse to negotiate. Unless you look to try and negotiate the voluntary redundancy offer you won’t know what your employer is willing to accept, so it is almost always best to try negotiating.
Consider seeking advice from a specialist employment solicitor to help secure the best possible package.
My employer is not offering me redundancy but is instead offering reduced pay and hours – what can I do?
If your employer proposes changes such as reduced pay or hours instead of redundancy, you have the right to accept, reject, or negotiate these terms.
If you believe the proposed changes are unfair, you may:
- Raise a grievance with your employer
- Seek advice from an employment solicitor
- Consider whether the proposed changes amount to constructive dismissal if you resign as a result
Read our guide on resignation at work
Can I request voluntary redundancy if I’m being bullied at work?
Yes, you can request voluntary redundancy if you are being bullied at work.
If you are experiencing workplace bullying, requesting voluntary redundancy may seem like an attractive option. However, before pursuing this route, consider whether:
- The issue can be resolved through your employer’s grievance process
- Your employer is likely to offer you voluntary redundancy or not – ask your workplace colleagues who have been through the voluntary redundancy process for their views, check what your employer’s policy is, and speak to your manager (or a member of Human Resources)
- Taking voluntary redundancy would impact your ability to make an unfair dismissal, discrimination, bullying or harassment claim later
- Requesting voluntary redundancy will help you resolve your issue – you may not have to leave your job, but could be able to solve the issue internally (via, as above, a grievance process)
It’s advisable to seek legal advice to explore your options and ensure you’re not compromising your rights unnecessarily.
Why is voluntary redundancy in effect a dismissal?
If you apply for voluntary redundancy, you are essentially agreeing to be dismissed and not resigning as you might assume. This means you could potentially have a claim for unfair dismissal if for example the redundancy situation which lead to your dismissal was not genuine. However, generally if you are voluntarily dismissed your employer will require you to sign a settlement agreement (sometimes referred to as a “redundancy settlement agreement“) which waives any potential claim you might have.
Can I make a claim for unfair dismissal if I have accepted voluntary redundancy?
Accepting voluntary redundancy could waive your right to make a claim for unfair dismissal (or any other claim), particularly if you have signed a statutory settlement agreement when accepting the voluntary redundancy payment.
However, exceptions may apply if (among other things):
- You were under duress when entering into the settlement agreement; or
- You did not receive appropriate legal advice from a solicitor before signing the agreement
If you have not signed a settlement agreement then you have probably not waived your right to bring a claim in the Employment Tribunal or civil courts, but bringing such a claim could have financial and legal consequences, depending on the paperwork that you have signed (among other factors).
If you’re unsure about the legal effect of accepting the voluntary redundancy, seek advice from an employment solicitor to determine whether you have grounds for a claim.
Is it discrimination to deny older employees the right to apply for voluntary redundancy?
Employers must avoid discrimination when managing voluntary redundancy processes. Denying older employees the opportunity to apply for redundancy, or using age as a criterion for selection, could amount to age discrimination.
In Donkor v The Royal Bank of Scotland UKEAT/0162/15 the Employment Appeal Tribunal held that denying an employee over 50 years old the opportunity to apply for voluntary redundancy during a business reorganisation was discriminatory as the way that the claimant was treated could be compared to employees who were under 50.
If you believe you have been unfairly excluded based on your age or other protected characteristics, you may have grounds to file an age discrimination claim in the Employment Tribunal.
Can you help me negotiate a voluntary redundancy offer?
Yes, employment lawyers can provide invaluable assistance when negotiating a voluntary redundancy offer. They can help:
- Evaluate whether the settlement offer is fair and in line with legal requirements
- Negotiate better terms, such as enhanced redundancy pay or extended notice periods
- Advise you on the terms of any settlement agreement offered
- Ensure the redundancy process complies with employment law and avoids discrimination
Voluntary redundancy can be an opportunity to leave your role on favourable terms, but it requires careful consideration and planning. Seek professional advice if you’re unsure about your rights or need help negotiating a better offer.
You can read more of our related guides here:
- What is a settlement agreement? A guide for employees
- What is redundancy and how does it work?
- Employment Tribunal claims -a guide for employees
Next steps
If you want to discuss an issue relating to a breach of a contract of employment then you can contact one of our specialist employment solicitors using the following details:
- By email: enquiries@redmans.co.uk
- By telephone: 020 3397 3603
- By requesting a callback