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Voluntary and Compulsory Redundancy

 

We prefer to stay positive as much as we can, but sometimes we have to be realistic and find ourselves forced to make difficult decisions.

If you are preparing redundancies here are the basic things you need to know provided by Peninsula. If you want to read Peninsula's tips on how to cut costs without letting your staff go, you can read them on page 12 of CBA's very own glossy: The Cork Connected.

Voluntary and Compulsory Redundancy

Redundancy generally occurs when you restructure your business and you need to reduce your employment numbers as a result. If you're closing your business, you'll also likely need to make employees redundant before ceasing operations.

This guide explains what you need to do.

What is the difference between voluntary and compulsory redundancy?

If an employee volunteers to take a redundancy package, that's voluntary redundancy. But if you select employees for redundancy, this is sometimes referred to as compulsory redundancy.

Voluntary redundancy

It's the term used to describe a situation when you ask employees to volunteer for redundancy to reduce the size of your workforce. Employees who agree to volunteer for redundancy can claim a statutory redundancy payment. That's provided they fulfil continuous reckonable service requirements plus any additional pay incentive you might offer.

Finding volunteers for redundancy

Depending on your circumstances, you may be in a position to offer a voluntary redundancy pay incentive to encourage employees to volunteer for redundancy. If you’re not offering a voluntary redundancy package, you must still comply with redundancy laws.

This means you must provide a minimum redundancy payment to employees who have completed a period of continuous service with your business.

What’s a voluntary redundancy package?

To encourage employees to volunteer for redundancy, employers typically put together a voluntary redundancy package which includes an additional ex-gratia payment on top of the employee’s entitlement to receive a statutory redundancy payment.

Can voluntary redundancy be refused?

If you offer employees a voluntary redundancy package and they refuse to accept the proposed payment, you can still make compulsory redundancies at a later stage.

Employees risk losing the additional ex-gratia payment as part of the voluntary redundancy package if they refuse the offer. However, they can still claim their entitlement to statutory redundancy pay.

Compulsory redundancy

If you're not offering a voluntary redundancy package, carrying out a redundancy process under the Redundancy Payments Acts 1967 - 2014 is sometimes referred to as compulsory redundancy.

To ensure the process complies with redundancy legislation, you must be able to demonstrate the following:

  • There’s a genuine need for the redundancies.
  • You applied a fair and transparent selection policy in selecting employees for redundancy.
  • The consultation process leading up to completion of the redundancies is fair.
  • Employees selected receive their statutory redundancy pay.

 

 

Peninsula’s webinar covers how to manage redundancy
Date: September 30th Time: 2pm

Register for the Webinar