Where a business is looking to reduce employee numbers, asking for volunteers to take redundancy can be a good way to avoid having to impose redundancy on anyone.
If you intend to ask for volunteers to take redundancy, it is generally the custom for an employer to offer more by way of remuneration than would be available by way of a statutory minimum payment.
Choosing Who To Offer Voluntary Redundancy To
You may want to extend your offer of voluntary redundancy to only certain employees. If you do this, you must ensure that the process you use for selection is fair and transparent. It is particularly important to avoid discrimination on the grounds of a protected characteristic, such as age or gender.
The Voluntary Redundancy Process
As well as following standard redundancy rules you should also make sure you comply with the procedure contained in your employee handbook.
Before going ahead with the request for volunteers, you should consider whether there are any alternative options to redundancy, such as moving staff to different roles or retraining them.
You should ask for redundancy volunteers in writing and include staff with the same or similar roles to the roles that you wish to dispose of. It is important at this stage to ensure you are not inadvertently discriminating against anyone. For example, by including only part-time staff, you could be indirectly selecting mainly women if they make up most of the part-time roles.
If you receive more volunteers than necessary then you will need to put fair selection criteria in place. This is generally done by using a redundancy selection matrix to score employees on issues such as skill level, performance, attendance, qualifications and disciplinary record. For more information, see our article on redundancy selection criteria.
It may be the case that an employee applies for voluntary redundancy whom you particularly want to keep. It is acceptable to turn down their offer, but you will need to be able to support this decision with good business reasoning, explaining why they are valuable to your organisation.
When you have selected your volunteers, you will then need to go through the ordinary redundancy process with them, advising them of dates on which they will leave and setting out the statutory redundancy pay they will receive.
This pay equates to one week’s gross pay for each complete year for which the employee has been continuously employed, with the weekly figure capped at £480.
Voluntary Redundancy Payments
The agreement reached with the employee can also include additional sums, such as compensation for loss of office and an ex-gratia payment on termination of employment. Other amounts due to the employee should also be included, such as accrued holiday pay, bonuses, commission, payment in lieu of notice and payment in respect of benefits.
The Settlement Agreement
The terms will need to be put into a settlement agreement, formerly referred to as a compromise agreement. As well as including the financial sums which the employee will receive, the agreement will also include certain safeguards for you as employer, restricting possible legal action against you and obtaining certain indemnities, for example, to pay any outstanding tax.
We can draw up a comprehensive settlement agreement on your behalf, ensuring it protects your business as far as possible, and advise you on the process for having it signed by your employee.
If you are considering making redundancies, our employment law team can advise you on the correct procedure and how to deal with voluntary redundancy.