If a company is in financial difficulties, or simply doesn’t need as many staff, it might ask people to volunteer to be made redundant. As an incentive employers will often offer more than would otherwise be payable in a compulsory redundancy situation(i.e. more than the minimum statutory redundancy pay). This is commonly referred to as ‘voluntary redundancy.
Do I have to apply for voluntary redundancy?
If your employer asks you to consider voluntary redundancy, you’re under no obligation to do so; as the name suggests it’s entirely voluntary. Similarly, if you volunteer, your employer is under no obligation to offer it to you -this might be because they have more volunteers than they need, or simply because they want to keep you.
Refusing to apply for voluntary redundancy will not affect your entitlement to any statutory or contractual payments you may be due if you are ultimately made redundant in the future.
You should think very carefully before accepting voluntary redundancy terms. For example, while the amount may seem to be a lot, you should seriously consider whether it will last until you find another job. If you have financial commitments, it’s important to consider how you will continue to meet those obligations. Carefully check the terms of any mortgage or loan protection insurance and whether accepting voluntary redundancy will affect your right to claim under the policy(ies) and/or to claim any state benefits.
How much money can I expect to receive?
The amount of money you should receive as part of a compulsory redundancy depends on a number of factors: your age, your length of service, and your weekly pay. To better understand what you're entitled to, read our article on what you can expect to get if you're made redundant.
Aside from any contractual enhanced redundancy policy, there are no hard and fast rules as to how much your employer can offer you if take voluntary redundancy. That said, you should generally expect it to be more than you would receive for compulsory redundancy. Your employer should tell you what they are offering – it’s likely to take into account factors such as how long you've been with the company and your current salary. It may be they also offer to pay you in lieu of your notice (so you can leave earlier) and an agreed reference.
It’s a good idea to ask for this information to be given to you in writing before you decide whether or not to accept any offer your employer makes. You may be given the opportunity to discuss the payment in order to try to negotiate a more generous arrangement. Or your employer may simply offer it to you on a ‘take it or leave it’ basis.
Once the offer is made, it’s up to you to decide whether or not to accept the voluntary terms. If you think there’s room for negotiation, you may want to consider engaging a third party, such as a solicitor or trade union representative, to negotiate for you.
Do my rights change if it’s voluntary rather than compulsory redundancy?
If you accept an offer of voluntary redundancy, you will effectively be agreeing to bring your employment to an end. However, it is not the same as a resignation. Voluntary redundancy is still classed as a dismissal, so subject to you having the necessary qualifying service, you will be entitled to a reasonable amount of time off to look for a new job or make arrangements for training for future opportunities.
Finalising your voluntary redundancy
If your employer is offering to pay more than your usual statutory and contractual entitlements, they may make an offer subject to you signing a settlement agreement. By signing such an agreement, you would sign away any rights you have, such as the right to claim unfair dismissal.
If you are given a settlement agreement, you must obtain independent legal advice on its terms and the effect of signing it in order for it to be legally binding – your employer will normally pay for this advice. Our specialist employment solicitors can advise on such agreements through its Settlement Agreement Advice Service - find out more
