The Risks of Voluntary Redundancies
09 September 2019

Redundancy – dismissal – unfair dismissal

Some months ago, a client agreed to allow an employee to take voluntary redundancy with an enhanced tax-free payment. Good result, you might think. What’s not to like?

It’s true that accepting volunteers for redundancy can be a quick and helpful, stress-free way to reduce numbers. But voluntary redundancy is still a dismissal and it’s therefore capable of being an unfair dismissal if the process is unfair or unfairly applied.

Here comes the law … a redundancy situation arises where a dismissal is:

  • wholly or mainly attributable to the fact that the employer has ceased or intends to cease to carry on the business for the purposes of which an employee was employed, or in the place where the employee was employed; or
  • the fact that the requirements of the employer for employees to carry out work of a particular kind, or for employees to carry out of a particular kind in the place where the employee was employed have ceased or diminished or are expected to cease or diminish.

Asking for volunteers means that you might be able to avoid the need for compulsory redundancies. This usually means offering some form of increased severance package. You do not have to accept all volunteers, but if you want to reserve the right to refuse volunteers, make this known in advance.

What happens if volunteers are falling over themselves to go and you have too many? You’re entitled to keep the skills you need in the business so consider who the poorer performing employees are and offer them voluntary redundancy while retaining the better performing individuals.

Remember that there is a risk of discrimination allegations by selected or non-selected employees. Ensure that you keep clear records of all consultations and that any decisions are objectively justifiable.

You will find it difficult to justify compulsory redundancies when volunteers are available.

Don’t ignore the requirement to consult, even in voluntary redundancy cases. If 20 or more employees at one workplace are at risk of being made redundant within 90 days, you will have to follow statutory consultation rules. Volunteers will usually count in the numbers of proposed dismissals.

Consult individually with affected employees, even where the decision appears obvious or when collective consultation is also taking place.

Where you have agreed on voluntary redundancy, hold a meeting with volunteers to tie up loose ends and to discuss whether they will be required to work their notice period.

You might think that the dismissal meetings and right of appeal may seem to be somewhat pointless in the case of volunteers (you’d be right in most cases),there is the possibility that a complaint may arise from the voluntary redundancy (e.g. the employee may argue they were forced in to accepting voluntary redundancy if they had been told the redundancy was inevitable anyway) so always follow the minimum procedures to avoid complaints of procedural deficiencies.

It’s also a good idea to ask employees who accept voluntary redundancy to sign a settlement agreement, reducing the risk of any potential claims.

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Although every effort has been made to ensure the accuracy of the information contained in this blog, nothing herein should be construed as giving advice and no responsibility will be taken for inaccuracies or errors.

Copyright © 2023 all rights reserved. You may copy or distribute this blog as long as this copyright notice and full information about contacting the author are attached. The author is Kate Russell of Russell HR Consulting Ltd.