Voluntary redundancy guide

  • Redundancy
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Peninsula Group, HR and Health & Safety Experts

(Last updated )

We explain the process you must follow if an employee takes voluntary redundancy. For further insights into employment law, Peninsula Business Services is here to help.

Redundancy situations are never easy and you’re often faced with difficult choices when it comes to deciding who, of your current workforce, you’ll make redundant.

With the coronavirus situation escalating, more employers than ever could find themselves faced with this issue.

And there’s one issue that causes some difficult—the employment law for voluntary redundancy.

Remember, to help you deal with this international crisis, we’ve opened our HR helplines to give employers affected by COVID-19 access to a free advice call.

So, for quick answers to questions on furloughs, lay-offs, and the Job Retention Scheme, call 0800 029 4384.

What is voluntary redundancy?

Voluntary redundancy is a situation where staff put themselves forward for redundancy as an alternative to you having to make this decision.

During a redundancy procedure, you could ask if any staff would like voluntarily redundancy. Alternatively, some may even put themselves forward without you first asking them to.

What are the voluntary redundancy rules?

In situations of voluntary redundancy, there are couple of important things to bear in mind:

  • You don’t have to offer the option for voluntary redundancy.
  • You don’t have to accept anyone’s request to be voluntarily made redundant.
  • The final decision for who should face redundancy, ultimately, rests with you.

Voluntary redundancy can help make managing redundancy procedures easier for you.

So, it’s important that, if an employee asks for this, you to understand how to respond.

The difference between voluntary redundancy and compulsory redundancy

The main difference is employees, essentially, choose to be put themselves forward for redundancy.

As we mention above, it’s your decision whether you wish to permit this. However, there can be a number of good reasons for voluntary redundancy. For example, to:

  • Avoid you having to make potentially difficult situations yourself.
  • Make the selection process less time consuming.
  • Avoid staff feeling they have been treated unfairly through a selection process.

Bear in mind staff may have their own personal reasons for voluntary redundancy. For example, they:

  • May feel they are in a better position for the redundancy than their colleagues
  • May want to try new things
  • May have been considering retirement and therefore do not mind the redundancy situation.

With the above in mind, it’s also important not to unfairly judge individuals who put themselves forward.

By volunteering, it doesn’t automatically mean they have no concerns about their role.

Is voluntary redundancy a dismissal?

In short, yes. Making staff redundant does amount to a dismissal.

This is because a redundancy is one of the five potentially fair reasons for dismissal. With this in mind, it’s important you follow the correct procedures.

Failure in this area could lead to potentially costly unfair dismissal claims at a later date.

How does voluntary redundancy work?

An employee requests redundancy instead of you choosing them. And you then consider their request.

This means they’re choosing to leave the business, but you’ll treat their departure as you would any member of staff who’s facing redundancy. This isn’t the same as a resignation.

But do companies have to offer voluntary redundancy before compulsory redundancy procedures start? It’s entirely down to you as a business if you offer this.

So, before implementing a voluntary redundancy process, you can inform staff there are to be redundancies.

And ask if any of them wish to put themselves forward for early voluntary redundancy.

You can also ask for volunteers throughout the process. Either before the redundancy procedure starts or as part of a later consultation process.

Staff can even be invited to voluntary put themselves forward from a group you have labelled at risk.

Once staff have volunteered themselves, you should decide if you wish to accept their specific request.

How Peninsula Business Services helps

Since 1983, we’ve assisted tens of thousands of small and medium-sized businesses. As HR experts for voluntary redundancy, we provide essential advice on how to deal with request from employees.

We can also guide you through the redundancy process as a whole. As industry leaders in HR and employment law consultancy since 1983, we’ve helped tens of thousands of businesses successfully deal with redundancy situations.

And this expertise is particularly essential during the coronavirus pandemic. We’re here to help—get in touch for quick answers to your question: 0800 029 4384.

Can voluntary redundancy be refused?

As it’s up to you who is made redundant, you reserve the right to refuse a request.

You may not wish to lose that specific member of staff, particularly if you feel they are very important to the day to day running of your business.

In this situation, if the employee then informs you that they wish to leave the company, it should be processed as a resignation.

You should consider every request carefully. For one thing, you can avoid making staff redundant who do not wish to leave and, potentially, avoid depriving yourself of a loyal and skilled employee.

Can an employee ask for voluntary redundancy?

You should make it clear the company isn’t obliged to accept requests for voluntary redundancy. That’s in any situation.

And simply applying for voluntary redundancy doesn’t necessarily mean you’ll accept it.

This is important, as it’ll allow you to reject applications from employees working in certain business critical roles.

There’s no legal entitlement to a voluntary redundancy appeal.

Being able to reject applications will also allow you to retain a balanced skilled workforce in the event they receive more applications than originally required.

With this in mind, it’s important to agree a clear and fair selection method when having to choose between multiple individuals applying for voluntary redundancy.

As simply selecting the cheapest redundancies to make could be discriminatory as it may disproportionately impact women at work.

Issuing a voluntary redundancy acceptance letter

Those permitted to take voluntary redundancy should receive a voluntary redundancy acceptance letter.

This’ll read as below—remember, you should adapt the below template to suit your business and each employee’s situation.

*Sample voluntary redundancy acceptance letter*


Dear [employee’s name],

We have received your request for voluntary redundancy with us. After careful consideration, we’ve decided to accept your request.

Going forward, you will need to sign on a resignation letter—we will provide this to you.

This letter will explain the additional benefits, and other compensations, we will offer as part of this agreement.

Your final working day with the business is on [date].

You will go through you standard resignation process. We include with this letter the exit process you must follow. It details the rights and responsibilities you have during the next phase.

Please do not hesitate to contact your manager, or our HR department, if you have any questions.

Yours sincerely,

[Manager’s name and signature]

*End of sample*

Notice period for voluntary redundancy

As a dismissal arises in a situation of non-compulsory redundancy, voluntary redundancy pay should still be distributed if the employee in question has at least two year’s of service with your company.

They should also be given the required notice as outlined in their contract.

To properly clarify your position on voluntary redundancy you are advised to include this in any redundancy policy.

This’ll help staff better understand their rights when it comes to redundancies, while also providing a useful framework to help guide managers and HR personnel through any tricky redundancy procedures.

What about voluntary redundancy during maternity leave?

As with other members of staff, those who are on prolonged periods of leave, such as maternity leave, can also volunteer to be made redundant through the procedures outlined above.

Again, you don’t have to accept such a request. However, if you do refuse it you should clearly outline why that’s the case.

At no point should an employee in this position feel they have been mistreated as a result of their maternity. This could easily led to a costly discrimination claim later.

It’s important to remember that, if you do agree to the redundancy, the employee will still be entitled to all of her statutory maternity pay alongside any additional redundancy pay. 

We’re here to help

Do you need support with potential redundancies—or need further guidance with a voluntary redundancy request? We’re here to help: 0800 029 4384.


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