Many employers have a policy that provides for 'voluntary redundancy' in certain circumstances. 

The process needs to be constantly monitored to ensure decisions on staff departures don’t impact a company's ability to survive a rationalisation process or a downturn in trade. 

Being aware of the advantages and disadvantages of voluntary redundancy allows employers to manage these situations effectively. 
 

Advantages of a voluntary redundancy

Affected employees can choose redundancy and see it as their own decision instead of experiencing the trauma of having an unexpected redundancy forced upon them. From the employee's perspective, there would be a sense of control over their departure from the company.  

If the employer manages the process properly, it can also serve as an opportunity to dismiss less productive employees without breaching unfair dismissal laws. This would require being as specific as possible about the positions that are being made redundant. 
 

Disadvantages of a voluntary redundancy

Although voluntary redundancies can ease the burden on employers, they may still lead to the loss of valuable staff, especially if the redundancy benefit on offer is higher than the minimum required. 

If applied across the board to all the workforce, an employer may have staff leaving from different sections who may be essential to the order and good running of the business. An employer should specify the extent of the voluntary redundancies as precisely as possible. 

The courts and tribunals view voluntary redundancy as a termination by the employer; therefore, other entitlements may still be payable in addition to redundancy pay, such as long service leave and annual leave loading. Projections as to the actual costs of voluntary redundancies should take these factors into account. 

Good employees or experienced employees tend to apply for voluntary redundancy. This is because they are confident of obtaining other employment quickly, or experienced employees may be at an age where semi-retirement is an option.  

Losing both categories of employees can cause significant problems in maintaining a productive workplace after the redundancy process has ceased. An employer can control the situation by ensuring that an offer of voluntary redundancy is subject to the employer's approval. 
 

Anti-discrimination legislation 

Trying to limit the type of employee preferred for voluntary redundancy may breach anti-discrimination legislation. Making statements such as wanting a ‘younger image’, with a corresponding offer of voluntary redundancy to employees over a particular age, could be in breach of this legislation. 


Long-term notice: another problem 

Another redundancy issue is when an employer gives lengthy notice to employees of a workplace closure. The employer would need key employees to remain in the company's employ until the closure date. The problem here is that these key employees would be seeking alternative employment because of the finite nature of their current employment.  

Generally, an employer would offer some financial incentive to persuade such employees to remain in the company's employment. This may involve an additional payout upon the closure date of the workplace or an extra payment under the company's redundancy payment policy.