Voluntary Redundancy – What is the legal position?

According to Indicator FL Memo, an ACAS-commissioned YouGov report from 2023 found that 30% of employers may make redundancies in 2024.

Employer's Duty Regarding Voluntary Redundancy

When carrying out a redundancy procedure an employer is under no legal duty to request volunteers and offer voluntary redundancy. However, it is usually advisable to do so as this can avoid and/or least reduce compulsory redundancies. In addition, this could demonstrate that a fair and reasonable process has been carried out when making redundancies.

When Can Employers Reject Volunteers?

Employers aren't obliged to accept all volunteers for redundancy. However, they must justify refusing an individual employee. Employers may refuse some volunteers if there are more applicants than required redundancies. It may also be than an employer sets out that it is in its interest to retain all key employees.

Legal Status of Employees Who Volunteer for Redundancy

An employee who has volunteered for redundancy is not considered to have resigned and is, therefore, still being dismissed. In that respect, an employee could still claim unfair dismissal in relation to their redundancy if they have the requisite continuous employment. It is advisable then that an application for voluntary redundancy is accepted provisionally. Those employees are still consulted with alongside any employees who have been provisionally selected for compulsory redundancy. An employer should only issue a redundancy notice once the consultation process has concluded.

Enhanced Terms in Voluntary Redundancy

Although employers often offer enhanced terms in voluntary redundancy, they are not obligated unless there is a contractual promise. However, employers often offer some form of enhancement to statutory redundancy pay to encourage volunteers to apply. If enhanced terms are offered, those terms should be set out clearly when communicating the option of voluntary redundancy.

The Importance of Following a Fair Procedure

It is important that employers follow a full and fair procedure when dealing with redundancies. Even in the case of voluntary redundancy. As mentioned above, an employee who elects voluntary redundancy is not resigning. Therefore, they can still claim unfair dismissal should the procedure not be a fair and reasonable one (and subject to them having the required continuous employment).

Settlement Agreements in Voluntary Redundancy Situations

It is quite common in voluntary redundancy situations (and very much advised in the case of the employer) to offer Settlement Agreements where enhanced redundancy payments are being offered. Any offer made should be clear that it is subject to the signed of a Settlement Agreement and made on a without prejudice and subject to contract basis.

Need Assistance? Contact Our Employment Team

Should you wish to discuss Voluntary Redundancy or require assistance with a Settlement Agreement in connection with the same as either an employer or employee, please contact Alex May from the Clarke & Son Employment Team on 01256 320555 or email mail@clarkeandson.co.uk.