Making the decision to reduce headcount is never easy. For many business owners, the word “redundancy” alone carries a heavy weight – both emotionally and practically. But in certain circumstances, offering voluntary redundancy can help soften the blow, giving employees more choice while supporting your business through change.
If you’re currently navigating this difficult territory, this guide is here to help. We’ll walk you through what voluntary redundancy means, what to consider before offering it and how to handle the process with fairness, empathy and care.
What Voluntary Redundancy Really Means
Voluntary redundancy happens when you invite employees to step forward and leave their roles in exchange for a financial package, typically more generous than the statutory minimum. It’s different from compulsory redundancy in that it puts the choice in the employee’s hands. Rather than selecting people yourself, you’re offering them the opportunity to exit on agreed terms.
This approach can bring a sense of control and dignity to what is often an unsettling time. While it doesn’t take away the emotional difficulty of losing team members, it can ease the pressure for everyone involved.
Why Some Employers Choose This Route
For many businesses, voluntary redundancy offers a chance to reduce costs and restructure more amicably. When handled with care, it can help preserve relationships and ease the emotional toll of change. Employees may appreciate the chance to consider their options, and you may find that those approaching retirement or thinking of a career change are open to taking the offer.
It can also help reduce the risk of disputes, especially if your selection process for compulsory redundancy would otherwise be complex or sensitive.
However, there are real challenges too. You might lose people you’d rather keep, particularly those with valuable skills or experience. And if not enough people volunteer – or the wrong mix of roles step forward – you may still need to move on to compulsory redundancies, which brings its own difficulties. That’s why a clear plan and honest conversations are so important.
Getting the Legal Stuff Right
Even when redundancy is voluntary, the legal foundations still matter. You’re still ending employment contracts, so it’s vital to follow proper procedure and treat people fairly. This includes being transparent about who’s eligible, how decisions will be made and what terms you’re offering.
If you’re planning to make 20 or more roles redundant within 90 days, a formal consultation process is required by law. But even for smaller numbers, consultation is a best practice – it helps employees feel informed, heard and respected.
It’s also essential to remember that voluntary redundancy must be just that: voluntary. No pressure, no persuasion. People need to be given the time and space to make the right decision for them.
You’ll also need to ensure that statutory redundancy pay, notice periods and any agreed enhancements are clearly outlined and paid on time. Getting this wrong could lead to disputes or even legal claims – something no business wants to face.
Managing the Process Step by Step
Start with clarity. What are you hoping to achieve? Are you closing a department, cutting costs, or preparing for a shift in business direction? Having a clear rationale will help you explain the situation to your team in a way that feels honest and constructive.
Next comes communication. You’ll need to talk to your staff openly about what’s happening and why. This can be a daunting conversation, but handled with sensitivity, it can help build trust and reduce uncertainty.
Once you’ve explained the situation, outline how employees can express interest in volunteering. Be clear that expressing interest doesn’t guarantee acceptance – there may be business reasons for declining an application, especially if it leaves you with a skills gap or undermines future plans.
Throughout this time, it’s crucial to remain compassionate and consistent. People may have questions, concerns or need time to think. Be ready to offer support and give them space to decide without pressure.
Once the window for applications has closed, take time to review them carefully. If you’re accepting applications, make sure you issue formal letters setting out the redundancy terms and next steps. And don’t forget to hold a proper exit meeting – this gives the employee a chance to ask questions, receive their final paperwork and say goodbye on good terms.
Looking After the Team That Stays
Redundancy doesn’t just affect those who leave. For those staying on, it can feel unsettling, confusing or even guilt-inducing. Morale can take a hit, especially if the process isn’t handled well.
That’s why it’s so important to follow up with the remaining team. Keep communication open, offer reassurance about the future, and be mindful of workloads. If someone has left a key role, ensure there’s a proper handover and that the rest of the team aren’t stretched too thin.
It can also help to bring people together – formally or informally – to reconnect, share concerns and start looking forward again. Change is hard, but with the right support, your team can emerge more resilient and united.
How We Can Help
Voluntary redundancy might sound more straightforward than compulsory redundancy, but it still comes with emotional and legal complexities. That’s where we come in.
At The HR Dept, we specialise in helping small and medium-sized businesses manage redundancies the right way – legally, fairly and with care. Whether you need support drafting your communications, understanding your obligations or managing the process from start to finish, we’re here to guide you.
Our local, personalised service means you’ll get practical advice that works for your specific circumstances. And because we know how stressful this can be, we’ll be on hand every step of the way – making sure your business and your people are looked after.
If you’re considering voluntary redundancies and want expert guidance to help you do it properly, get in touch with your local HR Dept office today. We’re here to help you make confident, informed decisions – while looking after your business and your people.
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