With the current furlough scheme coming to an end, and fears of a second lockdown looming, many Brits are worried about their job security.
Big brands like Greene King and Pizza Hut have already announced hundreds of job cuts as they close branches.
Some may feel like volunteering for redundancy and receiving a large lump sum of money could be right for them in the current climate.
Here’s what you should know if you have been offered voluntary redundancy.
What is voluntary redundancy?
Voluntary redundancy is when an employer asks a member of staff to agree to terminate their contract, in return for a financial incentive.
The employer will typically hold a meeting letting everyone know they are looking for volunteers, and then you can discretely apply.
An employer may offer voluntary redundancy because they need to narrow down the workforce, they are selling the company or restructuring their business.
What are your voluntary redundancy rights?
You will not lose any legal redundancy rights for volunteering, and your redundancy will be treated like any other.
You will still get any redundancy rights you’re entitled to, like time off to look for a new job.
This means an employer should:
- Consult with employees individually and inform them of their rights
- Include advice and information on how the redundancy will be implemented, the financial compensation on offer, notice periods, and any other relevant information
- Answer any questions surrounding the terms offered
You may also be able to negotiate your notice period with your employer.
What is the voluntary redundancy notice period?
This will depend on how long you’ve been with the company.
The statutory redundancy notice period tends to be:
- One week’s notice (for those employed between one month and two years)
- One week’s notice for each year (for those employed between two years and 12 years)
- 12 weeks’ notice (for those employed for a period of more than 12 years)
The numbers above are only a guideline. For more specific details on your notice period, consult your contract.
Are you entitled to more pay if you take voluntary redundancy?
The fee for voluntary redundancy is often more than the amount offered for statutory redundancy pay, although this is not guaranteed.
The first £30,000 of your redundancy pay will also be free from tax and National Insurance payments.
The minimum redundancy pay (and, therefore, the minimum amount you can be offered as voluntary redundancy pay) based on your age are typically as follows:
- Half a week’s pay for each full year served (under 22 years old)
- One week’s pay for each full year served (between 22 and 41 years old)
- One and a half week’s pay for each full year served (42 years and older)
Find out what you would be entitled to using the government’s calculator.
What financial support options are available?
On top of your redundancy pay, you may be able to claim several benefits, including Job Seeker’s Allowance.
There are a number of requirements to meet in order to qualify.
For example, income-related jobseeker’s allowance will only be available if:
- Your current savings add up to less than £16,000 (including your redundancy pay)
- You work no more than 16 hours a week
- Your partner works no more than 24 hours a week
For more information about what’s available to you, visit the gov.uk website.
What are the risks with voluntary redundancy?
Although a nice big pay package may seem tempting, it is also important to consider the risks of voluntary redundancy.
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In the current economic climate, it may be very difficult to find another job.
Additionally, if you put yourself forward for voluntary redundancy and are not selected, then it may affect the relationship you have with your employer – although, note they cannot fire you for volunteering.
MORE: Can you get made redundant on furlough or maternity leave? Your top redundancy questions answered
MORE: Can you get made redundant if you’re on maternity leave?
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