Voluntary Redundncy V Redundancy

Hello Brains Trust,

I have a former colleague in the following situation. Their employer is offering expression of interest for voluntary redundancies (non genuine).
They are confused because - a) their job/role as is will no longer exist
but they have the option to apply for a different position at same pay (only 2 positions available) at OR accept a different role (30% less pay) in the business.

They are confused by the term voluntary. If they are unsuccessful in applying for 1 of the 2 positions - their current job does not exist. Does this then become a forced redundancy (genuine)?

I have advised they seek tax advice and they are doing so when the office reopens.

Is there any other tips/ advise people can offer, what questions they need to ask, who else they need to consult etc etc.




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What do you mean by "non genuine"?

I would assume that your friend can either volunteer for a redundancy or apply for the new positions. If they fail to secure one of them then they will be effectively demoted. They need to check on what the voluntary redundancy offers. Usually the main benefit of redundancies is an additional payment based on length of service so if your friend has not been in the job for long then there is little benefit.

 

Redundancy means the job will no longer exist, so you can either:
Voluntary Redundancy, putting your hand up to take what they offer
Forced Redundancy, you have no choice, here's what you get, see ya

There's often an obligation for the company to try and find another role for an individual (often without a pay cut), but if they can't get one of the two positions then they have to weigh up the redundancy payout figure against the pay cut (and no package) for a lesser role.

Often you can ask for assistance in retraining (particularly if there's no work around in that field, the company may even get Gov assistance/tax concessions for this).

How employable is this friend, how long have they been with the company, is there similar employment opportunities in the same field locally ?

 

I suggest they talk to their Union!

 

Believe voluntary redundancy has a lower payout than forced redundancy so a saving for the employer. However it may be possible to work a longer notice period and make up the salary difference.

 

The size of the redundancy benefit completely depends on a length of service and a company policy. For some people with the long length of service with the generous worplace, the redundancy payment with reduced tax obligation can be the size of the small lotto win.

Once I calculated the potential size of my hypothetical redundancy payment and it indicated with the notice period paid out and the reduced tax, I would get 10- 11 months worth of pay to my hand. But my employer has never given us a chance to apply voluntry redundancies, because otherwise the people they would like to keep would be taking money and run. Also I work in the industry that even in the down turn there are jobs available.

But I am well aware that with a short length of the service and working with a less generous company with minimum redundnacy entitlements, a person's situation is completely different.

 

Thanks for the replies. My friend has been at the same workplace for 25 years - and although the payout is significant - they are considering the ramifications 2-3 years down the track. There is a lack of similar industry options. All very daunting for them.

 

That's why there's accompanying outplacement services, career counselling or retraining opportunities which are may also be on offer.

 

Many employers seek voluntary redundancies to minimise the impacts on terminating satisfied employees. They generally do this first and then add to these with non-voluntary ones due to roles and skills and "numbers".

Most importantly the redundancy must be "bona-fide" and lead to a lost position. Re-engaging the employee on less pay in a similiar capacity may not satisfy the Fair Work requirements. The employer may be obliged to offer those roles to avoid redundancies rather than as a part of a restructure. This is usually referred to a redeployment by the Fair Work Commission. The employee may miss out of redundancy benefits if the employer has applied for relief AND they dont have to tell you !! Replying to a offer like this can be a trap. A offer at less pay does not mean full redundancy benefits must be paid either. The redundancy pay may be reduced.

Legal advice by a workplace lawyer or union lawyer would be wise to ensure the best decision is made.