Voluntary redundancy – the best option for employees?

People on their way to work

A number of large employers have recently announced the need to make redundancies to cut a significant proportion of their employees.  

Financial businesses such as HSBC and Standard Life have recently hit the headlines announcing the need to make redundancies. Employees in the manufacturing sector also face the threat of job losses. 

When redundancies are proposed, employers have a duty to consult with employees to try to find alternatives to terminating employment. This involves meeting with employees to explain why their role is at risk of redundancy and consider any alternative jobs that may be suitable.  

The threat of redundancy is unsettling and the consultation process is stressful because of uncertainty of losing your job.  

Where an employer needs to decide which employees are to become redundant they will often create a scoring system that gives a marks to employees on criteria such as Skills, qualifications or attendance record. 

Scores are normally awarded by a manager and are used to decide which employees become redundant.  

The benefits of voluntary redundancy 

As part of a consultation, employers should consider offering the opportunity for employees to volunteer for redundancy. 

This may be a more attractive option for an employee where the financial terms of a voluntary redundancy are more favourable than they would receive if the employer decides to make their role redundant after a consultation process.

Volunteers normally receive an enhanced redundancy payment. 

Benefits of settlement agreements 

A settlement agreement is a legally binding contract that sets out the terms of a settlement between an employer and employee. 

Agreements are often proposed as part of a voluntary redundancy. The terms normally include an enhanced redundancy payment.

Before signing a settlement agreement, an employee must seek legal advice so that they are aware of their employment law rights. 

Some employers will try to add extra terms such as not being able to work for a rival business for a period of time so it is important that advice is taken from a specialist employment solicitor before accepting a settlement agreement.

There are also tax implications which can be complex but are necessary to consider to avoid the possibility of a future unwanted bill.  

Why specialist employment legal advice is worth the cost

Digby Brown have a team of independent and specialist employment solicitors who have a wealth of experience obtaining excellent outcomes for our clients.  

We offer bespoke and experienced legal advice to employees on the terms and effect of settlement agreements.

This can be done at a meeting, by phone or through video conferencing – whatever suits you best.  

Our advice and representation will assist in protecting your future employment prospects, as well as making sure your financial interests are looked after. 

Where changes to a settlement agreement are required to give you the best protection then we can advise you and negotiate on your behalf.  

If you need advice in relation to a settlement agreement, then please contact us. We have offices throughout Scotland in Glasgow, Edinburgh, Dundee, Inverness, Kirkcaldy, Aberdeen and Ayr.