What is a voluntary severance scheme? Your questions answered.

What is a voluntary severance scheme?

A voluntary severance scheme is where your employer invites members of staff to volunteer for redundancy.

Your employer might create a voluntary severance scheme, to allow staff members the option to put themselves forward for redundancy, before your employer potentially selects members of staff for redundancy.

If you volunteer for redundancy, and this is accepted by your employer, your employment will ultimately come to an end subject to terms being agreed. Your employer does not have to agree to make you redundant as they will need to consider the needs of the business.

Do I have to take part in a voluntary severance scheme?

No you do not have to take part. It is entirely your individual choice whether you wish to take part in a voluntary severance scheme or not.

What will happen if I volunteer to take part?

Your employer may have a discussion with you about what your terms of exit will be for example, what compensation they are willing to pay you and when they propose your termination date will be. Your employer will likely send to you a settlement agreement setting out formal terms for the end of your employment.

What is a settlement agreement?

A settlement agreement is a type of contract. If you enter into a settlement agreement relating to your employment and its’ termination, you are usually waiving your right to bring all and any claims against your employer and any related person or entity with regards to your employment and its’ termination. Not all settlement agreements are the same.

Do I have to agree to the settlement agreement offered to me?

No you do not have to agree to the terms your employer offers you. However, if you suggest any amendments to the settlement agreement, this will constitute a counter-offer of settlement and your employer will not be legally obligated to put the original offer back on the table.

Generally speaking, the more reasonable your proposed amendments are, if any, the more likely your employer is to agree to them.

Your employer does not have to agree to any amendments that you or your solicitor suggests.

The Citizens Advice Bureau offers online guidance about considering whether voluntary redundancy is right for you, what benefits you might be entitled to after taking voluntary redundancy and planning for after redundancy.

Can I discuss the settlement agreement with a lawyer?

Yes, you are entitled to take independent legal advice on the meaning and contents of the settlement agreement. Your employer may suggest some law firms that you can contact but you do not have to use their recommended lawyers if you do not want to. Your employer will typically offer a contribution to your legal fees to have the agreement explained to you by an independent legal adviser.

At Ellis Jones, our Employment Law solicitors can advise you on your settlement agreement and will cap their costs to the contribution offered by your employer, subject to any protracted or complex negotiations.

Can I change my mind?

If both parties have signed the settlement agreement, it becomes an open and binding document evidencing an agreement between you and your employer. Typically, the only way to vary that agreement is if both parties agree to a variation. Any amendments usually need to be in writing and signed by both parties. Therefore, if you have a completed settlement agreement, you will not be able to change your mind without your employer’s consent. If you do not have a completed settlement agreement, you should usually be able to change your mind.

Will it look bad to other employers?

Volunteering for redundancy is not typically considered by prospective employers as a sign that you are a bad leaver.

Should I take any other advice?

You may wish to take independent financial, tax and/or pension advice particularly if the settlement agreement provides for large sums of money to be paid to you in compensation for the termination of your employment.

If you have been offered a settlement agreement and are seeking independent legal advice, get in touch with our Employment Law team for assistance on 01202 525333 or by email at employment@ellisjones.co.uk.