If your business is considering making redundancies then it is good practice to consider seeing whether it’s possible to make voluntary redundancies as well as having to implement the compulsory redundancies that will be necessary. Voluntary redundancies are a good way of ensuring that the least damage is done to morale in the workplace by the impending restructuring. This post therefore explores the steps that employers should take when making the offer of voluntary redundancy to their employees. This will entail looking at the following elements:
- When does a genuine redundancy situation exist?
- When should I notify employees of the possibility of their taking voluntary redundancy?
- What steps should I take to make sure the voluntary redundancy process is fair?
- What safeguards should I put in place to make sure the voluntary redundancy option doesn’t harm the business?
When does a genuine redundancy situation exist?
A genuine redundancy situation must exist for your business to be able to justify redundancies. If you are not able to justify the redundancies then it is likely that any employees that are made redundant would be able to credibly assert that they were unfairly dismissed.
A genuine redundancy situation exists if one of the following three circumstances apply:
- The business for which the employee was employed is (to be) closed;
- The place of business at which the employee was employed to work is (to be) closed; or
- There is a reduced requirement for employees to carry out work of a particular kind
When should I notify employees of the possibility of their taking voluntary redundancy?
You should notify employees before the redundancy consultation procedure begins that there is the possibility of their taking voluntary redundancy. You should invite applications for redundancy but make it clear that although all offers of voluntary redundancy will be considered you reserve the right not to accept all offers of voluntary redundancy. This avoids the circumstance where there are more offers of voluntary redundancy than there are “places” available and also avoids a situation where you lose key employees because they’ve applied for voluntary redundancy.
What steps should I take to make sure the voluntary redundancy process is fair?
You should go through all of the steps that you would go through if you were making a compulsory redundancy. This avoids a potential situation where you haven’t undertaken the proper procedures and the employee later retracts their offer of voluntary redundancy, leading to a potential unfair dismissal claim by the employee. You should therefore:
- Establish how many redundancies are being proposed
- Create an appropriate pool of employees
- Create and apply appropriate selection criteria
- Create a list of suitable alternative vacancies for employees
- Meet with all employees to be made redundant
- Score the employees using the selection criteria
- Meet with the employees on an individual basis
- Have a further meeting with the selected employees on an individual basis to confirm selection for redundancy
- Send a letter dismissing the employee for redundancy (and allowing them to appeal)
What safeguards should I put in place to make sure the voluntary redundancy option doesn’t harm the business?
As above, you should do the following:
- Make it clear that you reserve the right to reject offers of voluntary redundancy made by employees
- Take the appropriate steps to make sure that the redundancies are made fairly
- Consider offering the employee a settlement agreement to the employee to reduce your risk
- Allow the employee to appeal their redundancy
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