Legal Article - Employment Law

Voluntary Redundancy and Early Retirement

Prior to the consultation stages, employer’s must offer all staff the opportunity to take voluntary redundancy. This will save the number of compulsory redundancies.

No employee can be coerced or forced to take voluntary redundancy. It must be purely their own decision and the employer must agree to it. If numerous staff volunteer, employers can select the appropriate number from the candidate pool.

The employer should state in their redundancy policy that the management have the authority to decide who should be allowed to take voluntary redundancy. This safeguards the company against potential issues regarding skill imbalance amongst the workforce.

Any selection made within this smaller candidate pool must be fair and justifiable as with compulsory redundancies. Employers can offer enhanced payments for non compulsory redundancies but they must not be perceived to be a bribe or tool of coercion.

Changes to current law has enabled the current retirement age of 65 to be scrapped. The phasing out of this regulation began in April 2011 but as the 6 month notice period is still applicable, no compulsory retirements can now be made without objective justification.

Early retirement, therefore, will now be on a voluntary basis. As with voluntary redundancy this can be offered as an alternative to compulsory redundancy prior to the consultation period. Incentives can be offered in order for staff to consider this option although employers need to be mindful that they may have to fund a pension for longer than planned.

Early retirement, must be a genuine choice made by the employee free from coercion and both parties must agree to it. If this is followed then it will not be classed as a dismissal or a statutory redundancy; thus neither procedure will apply.


Published: 02 Jun 2011


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