March Blog 2

How To Manage The Voluntary Redundancy Process

When people hear the word redundancy it can often bring thoughts of a difficult and even upsetting time. During the COVID-19 pandemic, we have all become accustomed to mass redundancies and companies closing. Having voluntary redundancy as an option can help to ease these tough times!

 

Research has found that voluntary redundancy smooths the downsizing process, making it far easier for both employer and employee. If you want to know what the voluntary redundancy process is and how it works, keep reading.

 

What Is Voluntary Redundancy?

 

If your employer is looking to make redundancies, one option is to volunteer yourself before the selection is made. The employer does not have to select you for voluntary redundancy.

 

Employers cannot offer voluntary redundancy to selected groups of people, for example, all those over the age of 50. This is age discrimination and can be punishable by law! However, employers can ask their workforce for volunteers for redundancy.

 

If you decide to take up the offer of voluntary redundancy, a letter or email should be written to confirm your interest. The Advisory, Conciliation and Arbitration Service (ACAS) suggests that putting your interest in writing can be beneficial and help with the company’s redundancy procedure.

 

Your employer does not have to accept your offer, usually, selections are made with the businesses best interests at heart. If an employee volunteering for redundancy is fully qualified and experienced, they may choose to reject the redundancy offer.

 

What Happens Next?

 

When everyone in the business has had the chance to volunteer themselves for redundancy, the employer will make a selection of employees. This is only the employers choice to make, if you volunteer it doesn’t guarantee you will be made redundant.

 

Once selected, all employees who are chosen should receive a letter confirming the redundancy. This letter is important if you choose to take your employer to an employment tribunal (for example, if you don’t receive your redundancy pay). Any employee over the age of 18 with over a year of service can claim unfair dismissal.

 

If an employee is close to the age of retirement, the employer may offer the option of early retirement instead of redundancy. This can be a great option if a good pension is available. However, these employees should consider the redundancy package they may receive and any benefits they’re entitled to.

 

The Voluntary Redundancy Process

 

Employers need to follow the proper procedure for voluntary redundancy, if not they may face employment tribunals and expensive legal fees. Firstly, employers should write a letter to all staff informing them of the situation at hand, asking for volunteers for redundancy.

 

Being honest and open with difficulties your organisation is facing can seriously improve the chances of employees volunteering for redundancy. Involving senior management can help by becoming a point of contact for employees, which can help build trust.

 

Employers should also prepare for employees to ask various questions, for example, what incentives are in place to take redundancy? Before offering redundancy to employees, it is a good idea to decide things like what incentives you’ll offer and what redundancy pay rate will be.

 

Redundancy Consultation

 

Those who volunteer for redundancy have the same rights as those who are selected for statutory redundancy, meaning they have a legal right to consultation! During this consultation, the employer should outline why they’ve been selected for redundancy and what alternatives are available (e.g. reduced hours, different job role, etc).

 

If employers are making 19 or fewer redundancies, there are no official rules on how the consultation takes place. If 20 or more people are being made redundant at the same time, collective redundancy rules apply.

 

Redundancy Notice Period

 

Anyone who has been selected for voluntary redundancy must be given a notice period before employment is terminated (same for statutory redundancy). The notice period length can vary depending on how long the employee has been employed.

 

If the employee has been working for one month to two years, a week’s notice is required. A week’s notice should be given for each year of service to those who have worked for two to 12 years. For those who have worked with the business for over 12 years, the minimum notice is 12 weeks.

 

Employers are required to pay employees during their notice period, this can be done weekly or in lieu. Payment in lieu of notice means that instead of having a notice period, employees are given a lump sum of money, which should be equal to the notice pay.

 

Redundancy Pay

 

You are entitled to redundancy pay if you’re an employee and have been working with the business for two or more years. For every year an employee has worked, they will receive more redundancy pay (service capped at 20 years).

 

Employees will receive;

  • ½ A Week’s Pay For Each Year If You Were Under 22
  • 1 Week’s Pay For Each Year You Were Over 22 But Under The Age Of 41
  • 1 And ½ Week’s Pay For Each Year If You Were Over 41

If you’d like to calculate how much redundancy pay you should be entitled to, click here, to use the government’s redundancy pay calculator. This is a great way to check what the minimum pay you’d be entitled to if you became redundant.

 

Usually, voluntary redundancies offer larger sums when compared to statutory redundancy. This makes a good incentive for employees to choose redundancy, making the process easier for the employee and the employer.

 

For most people, voluntary redundancy is a far better option compared to statutory redundancy. Research shows it allows employees to keep their self-esteem and maintain a good relationship with the employer (or ex-employer). It also reduces the known effects of statutory redundancies – financial, physical and psychological.

 

It is ultimately up to business owners to decide if voluntary redundancy is the right route to go down. Whatever the decision is, employees have the same rights when it comes to redundancies (voluntary or statutory).

 

If your company needs help with making redundancies or with any legal implications that may occur – Contact Wurkplace! We are HR, Health & Safety and Employment Law experts, providing bespoke solutions to businesses across the UK.

Call us on 0330 400 5490 or email us at info@wurkplace.co.uk.

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