Voluntary redundancy

Redundancy is never a pleasant time for anybody involved – no company wants to lose staff, and of course, if you're the person that loses your job it can be an incredibly stressful time. This can be made worse if your workplace has a difficult to understand voluntary redundancy scheme.

In this simple guide, we'll go through some of your basic rights to help you make the best decision for your career.


Do I have to take voluntary redundancy?

No. If a company forces you to take redundancy, or puts pressure on you to take it, then that's compulsory redundancy, or worse, unfair dismissal. You should only take voluntary redundancy if it's the right move for you and your career.


What should I do before taking voluntary redundancy?

Hopefully you will have some time before any redundancies are made. When they are on the horizon, there is no better time to take a good hard look at your finances – what would you do if you lost your job tomorrow?

Start to make a practical budget for if the worst happens and have a think about how you could free up extra cash, perhaps through selling assets. Knowing what position you will be in if you had to decide about voluntary redundancy will help you make a more informed, better decision.


How much notice am I entitled to?

The amount of notice a company is required to give will depend on the length of time you've been at the company and how many people are being made redundant.

There are statutory notice periods as governed by law, but many companies give longer notice periods than that, but you'll need to check your employment contract for information on this. The statutory minimum depends on how long you’ve worked at the company.

  • Between 1 month – 2 years - At least one week's notice
  • Between 2-12 years - One week's notice for each year of employment
  • Over 12 years – 12 weeks’ notice

There should also be a consultation period if the company is making more than 20 employees redundant. This should start at least 30 days before any dismissals come into effect. If the company is making 100 or more redundancies, the notice period should be at least 45 days.

You may be offered pay in lieu of a notice period, which means you'll be paid as if you were working your notice period, but your employment may terminate immediately, or sooner than the usual notice period.


Who represents me during the consultation period?

You may be represented by a trade union representative (if you belong to one), or an employee representative.

You may wish to stand for such a position yourself should a consultation period take place. It’s best to speak to your employer about your rights in this scenario.


How much redundancy pay am I entitled to?

You are entitled to statutory redundancy pay if you've been working at the company for more than two years.

It's also dependent on your age – you'll get half a week's pay for each full year you were under 22, 1 week's pay for each full year you were 22 or older, and 1 and a half week's pay for each full year you were 41 or older.

Your employer may offer you more redundancy pay than this, but they can't offer you less. If the company has gone bust, you may need to collect your statutory pay from the administrators dealing with the insolvency.

There are some exceptions to redundancy pay-outs – for instance if you're offered alternative employment, or your employer offers to keep you on (doesn't accept your proposal for voluntary redundancy).

The first £30,000 of any redundancy money you receive is tax free and you won't be charged national insurance on it.


Do I have to take alternative employment if offered?

Not necessarily – but it can affect your redundancy pay-out if you refuse any work which is deemed suitable without a good reason. If you're offered a job which you don't wish to take, you can appeal that decision.

When thinking about whether a job is suitable, consider how similar it is to your current position, the terms in the contract, how it relates to your skills and abilities as well as the pay, location and status of the job.

If you decide to take the alternative job but then change your mind, you have a four week trial period to make your mind up – which can be extended if you need further training to complete the job effectively.



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